PREFACE

Someone has rightly said that practical experience is for better and closer to the real world
then mere theoretical exposure. The practical experience helps the students view the real
world closely, which in turn widely influences their perceptions and argument their
understanding of the real situation.

Research work constitutes the backbone of any management education program. A

management student has to do research work quite frequently during his entire span.

The research work entitle “FUNDAMENTAL ANALYSIS OF BANKING SECTORS IN

INDIA” aims to analyze various services provided by private sector banks and public sector
banks.
 ACKNOWLEDGEMENT

It is my pleasure to be indebted to various people, who directly or indirectly contributed in the

development of this work and who influenced my thinking, behaviour and acts during the
course of study.

I express my sincere gratitude to Mr. Neeraj Mishra, for providing me an opportunity to

undergo summer training at ICICI BANK LIMITED

I am thankful to Mr.Anup bagchi, Executive Director for his support, cooperation and
motivation provided to me during the training for constant inspiration, presence and blessings.

Lastly, I would like to thank the almighty and my parents for their moral support and my
friends with whom I shared my day-to-day experience and received lots of suggestions that
improved my quality of work.

SHAIL KUMARI

MBA 2ND YEAR

INTRODUCTION
CHAPTER -1
 INTRODUCTION

Without a sound and effective banking system in India it cannot have a healthy economy. The
banking system of India should not only be hassle free but it should be able to meet new
challenges posed by the technology and any other external and internal factors. For the past
three decades India's banking system has several outstanding achievements to its credit. The
most striking is its extensive reach. It is no longer confined to only metropolitans or
cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners
of the country. This is one of the main reason of India's growth process. The government's
regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of
14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting a draft
or for withdrawing his own money. Today, he has a choice. Gone are days when the most
efficient bank transferred money from one branch to other in two days. Now it is simple as
instant messaging or dials a pizza. Money has become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till today,
the journey of Indian Banking System can be segregated into three distinct phases. They are
as mentioned below:

 Early phase from 1786 to 1969 of Indian Banks

 Nationalization of Indian Banks and up to 1991 prior to Indian banking sector
Reforms
 New phase of Indian Banking System with the advent of Indian Financial & Banking
Sector Reforms after 1991

Definition of the Bank:- Financial institution whose primary activity is to act as a payment
agent for customers and to borrow and lend money. Banks are important players of the market
and offer services as loans and funds.

 Banking was originated in 18th century

 First bank were General Bank of India and Bank of Hindustan, now defunct.
 Punjab National Bank and Bank of India was the only private bank in 1906.
 Allahabad bank first fully India owned bank in 1865.
Types Of Banking

Commercial bank has two meanings:

1. Commercial bank is the term used for a normal bank to distinguish it from an
investment bank. (After the great depression, the U.S. Congress required that banks
only engage in banking activities, whereas investment banks were limited to capital
markets activities. This separation is no longer mandatory.)
2. Commercial bank can also refer to a bank or a division of a bank that mostly deals
with deposits and loans from corporations or large businesses, as opposed to normal
individual members of the public (retail banking). It is the most successful department
of banking.
 Community development bank are regulated banks that provide financial services and
credit to underserved markets or populations.
 Private banks manage the assets of high net worth individuals.
 Offshore banks are banks located in jurisdictions with low taxation and regulation.
Many offshore banks are essentially private banks.
 Savings banks accept savings deposits.
 Postal savings banks are savings banks associated with national postal systems.

There are some examples of banks in India:-

 Private sector bank

• HDFC, ICICI, Axis bank, Yes bank, Kotak Mahindra bank, Bank of Rajasthan
 Rural bank
• United bank of India, Syndicate bank, National bank for agriculture and rural
development (NABARD)
 Commercial bank
 State Bank, Central Bank, Punjab National Bank, HSBC, ICICI, HDFC etc.
 Retail bank
• BOB, PNB
 Universal bank
• Deutsche bank
 CONSOLIDATION OF INDIAN BANKING SECTOR

As mentioned by Governor Jalan in his address to this forum in 2002, "In financial systems
worldwide, today’s buzzwords are competition, consolidation and stability". There has been
impressive stability and considerable competition in India but the process of consolidation in
banking industry has just commenced. The issue of consolidation has been addressed by the
Narasimham Committee Report on Banking Sector Reforms (1998) but the issue in regard to
policy is yet to be pursued vigorously.

There are three aspects to consolidation viz.

1. clear cut legal and regulatory regime governing consolidation,

2. enabling policy framework especially where several banks are owned by Government,
3. And market conditions that facilitate such consolidation.

Recognizing that all mergers and acquisitions may not necessarily be in the interest of either
the parties concerned or the system as a whole

RBI's stated policy currently would permit acquisitions of any Indian private sector bank after
2009. As per the policy in 2009, a determined foreign player could acquire any Indian private
sector bank, the best assets in the market place.

Current banking sector can be divided in the following categories

Types of banks

Central Bank Development Banks Specialized

(RBI) (EXIM Banks,
SIDBI, NABARD)
Commercial Banks Co-operative Banks

(i) Public Sector Banks (i) Primary Credit Societies

(ii) Private Sector Banks (ii) Central Co-operative
Banks
(iii) Foreign Banks (iii) State co-operative Banks
RESERVE BANK OF INDIA

The Reserve Bank of India (RBI) is India's central banking and monetary authority. RBI
regulates loans offered by banks and non-banking financial institutions to government
entities, businesses, and consumers and controls the availability of funds in the financial
system for credit.

DEVLOPEMENT BANK

(i) Industrial finance Corporation of India

(ii) Industrial development bank of India
(iii)Industrial credit and Investment Corporation of India (ICICI)
(iv) Industrial investment bank of India (IIBI)
(v) Small industries development bank of India (SIDBI)
(vi) SCICI ltd.
(vii) National bank for agriculture and rural development
(viii) Export import bank of India
(ix) National housing bank

COMMERCIAL BANK

A commercial bank is a type of financial institution that provides services such as accepting
deposits, making business loans, and offering basic investment products. Commercial bank
can also refer to a bank, or a division of a large bank, which more specifically deals with
deposit and loan services provided to corporations or large/middle-sized business - as opposed
to individual members of the public/small business - retail banking, or merchant banks.

CO-OPERATIVE BANK

Cooperative banking is retail and commercial banking organized on a cooperative basis.

Cooperative banking institutions take deposits and lend money in most parts of the
world.Cooperative banking, as discussed here, includes retail banking carried out by credit
unions, mutual savings banks, building societies and cooperatives, as well as commercial
banking services provided by mutual organizations (such as cooperative federations) to
cooperative businesses.

SPECIALIZED BANK

Know the specialized banks as those banks that specialize in financing certain economic
sectors, and most important types of specialized banks, industrial banks, agricultural banks
and banks of real estate, as the specialized banks are defined as those banks that are banking
operations that serve a specific type
 OBJECTIVES OF STUDY

 To study the changes in the banking system over the years.

 To evaluate the current situation in the banking industry by fundamental analysis.
 Comparative study of banking companies.
 To determine the future direction of the stocks by technical analysis.
 To learn about the reforms in the banking sector.
 SCOPE OF THE STUDY

 A healthy banking system is essential for any economy striving to achieve good growth
and yet remain stable in an increasingly global business environment. The Indian
banking system, with one of the largest banking networks in the world, has witnessed a
series of reforms over the past few years like the deregulation of interest rates, dilution
of the government stake in public sector banks (PSBs), and the increased participation
of private sector banks. The growth of the retail financial services sector has been a key
development on the market front. Indian banks (both public and private) have not only
been keen to tap the domestic market but also to compete in the global market place.
 Studying the increasing business scope of the bank.
 Market segmentation to find the potential customers for the bank.
 Customers’ perception on the various products of the bank.
 The corporate sector has stepped up its demand for credit to fund its expansion plans;
there has also been a growth in retail banking.
 The report seeks to present a comprehensive picture of the various types of bank. The
banks can be broadly classified into two categories:

 Nationalize Bank
 Private Bank
 Within each of these broad groups, an attempt has been made to cover as
comprehensively as possible, under the various sub-groups.
COMPANY PROFILE
CHAPTER- 2
 COMPANY PROFILE

ICICI Bank is India's largest private sector bank with total consolidated assets of Rs. 9,860.43
billion (US$ 152.0 billion) at March 31, 2017 and profit after tax of Rs. 98.01 billion (US$
1.5 billion) for the year ended March 31, 2017. ICICI Bank currently has a network of 4,850
Branches and 13,942 ATM's across India.

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution,
and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to
46% through a public offering of shares in India in fiscal 1998, an equity offering in the form
of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura
Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to
institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the
initiative of the World Bank, the Government of India and representatives of Indian industry.
The principal objective was to create a development financial institution for providing
medium-term and long-term project financing to Indian businesses.

In the 1990s, ICICI transformed its business from a development financial institution offering
only project finance to a diversified financial services group offering a wide variety of
products and services, both directly and through a number of subsidiaries and affiliates like
ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial
institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the emerging
competitive scenario in the Indian banking industry, and the move towards universal banking,
the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with
ICICI Bank would be the optimal strategic alternative for both entities, and would create the
optimal legal structure for the ICICI group's universal banking strategy. The merger would
enhance value for ICICI shareholders through the merged entity's access to low-cost deposits,
greater opportunities for earning fee-based income and the ability to participate in the
payments system and provide transaction-banking services. The merger would enhance value
for ICICI Bank shareholders through a large capital base and scale of operations, seamless
access to ICICI's strong corporate relationships built up over five decades, entry into new
business segments, higher market share in various business segments, particularly fee-based
services, and access to the vast talent pool of ICICI and its subsidiaries.

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of
ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial
Services Limited and ICICI Capital Services Limited, with ICICI Bank.

ICICI Group Companies

ICICI Group
http://www.icicigroupcompanies.com

ICICI Prudential Life Insurance Company

http://www.iciciprulife.com/public/default.htm

ICICI Securities
http://www.icicisecurities.com

ICICI Lombard General Insurance Company

http://www.icicilombard.com

ICICI Prudential AMC & Trust

http://www.icicipruamc.com

ICICI Venture
http://www.iciciventure.com

ICICI Direct
http://www.icicidirect.com
ICICI Foundation
http://www.icicifoundation.org

Disha Financial Counselling

http://www.icicifoundation.org

Executive Director's Profiles

Chanda Kochhar
Managing Director & CEO

N.S. Kannan Vijay Chandok Vishakha Mulye Anup Bagchi

Executive Director Executive Director Executive Director Executive Director
 Awards and Acheivements - 2017

 Ms. Chanda Kochhar was conferred with the Nirbhaya Puraskar, part of a nationwide
movement founded by the women’s rights activist Manasi Pradhan.

 ICICI Bank won the third prize in the ‘Service Sector-Mega: Banking, Financial Services and
Insurance’ category at the National Awards for Excellence in Cost Management.

 ICICI Bank was felicitated as one of the winners of the Best Performance Award from
NABARD for initiatives implemented under its Self Help Group (SHG) Bank Linkages
Programme in Tamil Nadu for financial year 2017. The bank has won this award for three
years in a row.

 ICICI Bank won the award in the ‘Best Private Sector Bank - Rural Reach’ category at the
‘Dun & Bradstreet Banking Awards 2017.

 ICICI Bank won all five awards in ‘Commercial Building’ category at the State Level Energy
Conservation Award, organised by Maharashtra Energy Development Agency (MEDA).

 Ms. Chanda Kochhar received the Dr. K.C.G. Verghese Excellence Award in the ‘Women
Achievers’ category. She received the award in recognition of her contribution towards the
progressive growth and development in the banking sector for more than two decades.
 ICICI Bank won the award in the ‘Analytics & Big Data’ category at the IDRBT Banking
Technology Excellence Award for 2016 - 2017. The awards are organised by the Institute for
Development & Research in Banking Technology (IDRBT), an institute established by the
Reserve Bank of India (RBI).

 Ms. Chanda Kochhar became the first leader to receive the Woodrow Wilson Award for
Global Corporate Citizenship by the Woodrow Wilson Centre located in Washington, U.S.A.

 ICICI Bank was declared runner-up in the 'Best Large Bank' category, according to the
Businessworld Best Bank Survey 2016.

 ICICI Bank was recognised by the Ministry of Rural Development, Government of India, for
the funding provided to Self Help Groups across rural India. This funding supported the
growth of the National Rural Livelihood Mission programme initiated by the Government.

 ICICI Bank ranked first among the Points of Presence (POP) identified under National
Pension System (NPS) in Private Sector Banks. The awards were presented during a
conference organised by the Pension Fund Regulatory and Development Authority.
 ICICI Bank featured in the number one position in two benchmark surveys by Forrester
Research, a marquee American research agency. The Bank has earned the top slot in the India
Mobile Banking Functionality Benchmark Report 2017 with a combined score of 70, which is
13 points ahead of its nearest competitor and 18 points ahead of the national average. The
Bank has received this top honour for the second consecutive year. The Bank also topped the
India Online Banking Functionality Benchmark Report 2017. It scored 59 out of 100, which is
16 points ahead of its nearest competitor and 14 points ahead of the national average. Both the
reports provide a benchmark for the current state of retail mobile banking and online banking
in India.
 ICICI Bank won the Website of the Year - India award at the ABF Retail Banking Awards
2017. Asian Banking & Finance, a Singapore-based publication, organises these awards.

 ICICI Bank won the award in the ‘Best Bank for Payments in India’ category at The Asian
Banker Transaction Banking Awards 2017. The awards are organised by The Asian Banker, a
Singapore based publication. The Bank won this award for being one of the pioneers in global
payments innovation initiatives in India.

 ICICI Bank won the Customer Experience in Financial Services 2017 award in the ‘Best
Technology Implementation – Front-End’ category. These awards were organised by Private
Banker International, a Singapore-based publication which is part of the trimetric group. The
Bank won this award for the Touch & Pay feature on its contactless cards using Host Card
Emulation (HCE) technology.

 ICICI Bank won two awards at the Intelligent Enterprise Awards 2017 organised by The
Indian Express in the ‘Storage’ and ‘Enterprise Applications’ categories. ICICI Bank won the
award in the ‘Storage’ category for the Enterprise Storage & Backup transformation project
that improves disaster recovery & compliance across operations. This award in the ‘Enterprise
Applications’ category was won for APP360 – a one-stop solution that enables the Bank to
manage the complex infrastructure across applications in an efficient way.

 ICICI Bank won the award in the ‘End Users of IT’ category for Chatbot on iMobile and
Software Robotics at the IMC Digital Technology Awards 2016
 ICICI Bank emerged as the ‘Best Bank for SMEs’ at the Asiamoney India Banking Awards
2017. The Bank has won this award for its automation initiative ‘COLORS’ (Corporate Loan
Origination System). COLORS is a system deployed within the Bank. It has an end-to-end
automated workflow right from logging in an application to disbursing the loan to SMEs.
 ICICI Bank won the Gold Award in the ‘Banks and Credit Cards’ category, as per the Readers
Digest Trusted Brand Survey 2017

 ICICI Bank won the ‘Best Retail Bank in India’ award for the fourth consecutive year at the
Asian Banker Excellence in Retail Financial Services International Awards 2017.

 ICICI Bank received two awards at the National Payments Excellence Awards 2016 in the
‘Large Bank’ category organised by NPCI (National Payments Corporation of India). The
Bank was declared winner for the ‘Immediate Payment System’ (IMPS) application and first
runner up for ‘Cheque Truncation System’ (CTS).

 ICICI Bank’s Pockets has been selected as ‘App of the year’ for 2015-16 at the FE Best
Banks awards organised by The Financial Express.

 Ms. Chanda Kochhar featured as an Evergreen Woman Leader in ‘BW’s Most Influential
Women’ list by Business World magazine.

 Ms. Chanda Kochhar voted as the ‘Favorite Female Business Icon’ by women professionals
aged 29 years and above, according to nationwide survey conducted by Talentedge, a Delhi
based education technology firm.
 ICICI Bank received runners-up awards in the categories of ‘Lean’, ‘DFSS’ (Design For Six
Sigma) and ‘DMAIC’ (Define, Measure, Analyze, Improve, and Control) at the Six Sigma
Case Study Presentation Contest 2017 organised by the Indian Statistical Institute, Bangalore.

 ICICI Bank has been voted as the 'Top Borrower in Asia – India' for the fifth consecutive year
and the 'Most Impressive Investment grade Financial Institution from Asia' in the online poll
conducted by FinanceAsia magazine in 2016.

 ICICI Bank won the 'Best Company to Work for' Award of Business Today magazine in the
Banking, Financial Services and Insurance sector.

 ICICI Bank was declared winner in four categories and first runner-up in one category among
'Large Banks' at the IBA Banking Technology Awards 2017. The Bank won the award for the
'Best Technology Bank of the Year'. It also won awards in the categories of 'Best Use of
Analytics for Business Outcome', Best Use of Digital and Channels' and 'Best Payments
Initiative'. The Bank was declared first runner-up in the category of 'Best IT Risk and Cyber
Security Initiatives'.

 ICICI Bank was awarded the ‘Gold category’ recognition at the Energy And Environment
Foundation Global Safety Award 2017. This is the highest award received by a bank in the
Financial Sector – Banking/Non-Banking Finance Companies, for its constant effort towards
encouraging safe work practices across operations.

 ICICI Bank won two awards at the Asset Triple A Country Awards 2016. The Bank won the
Best Bond House-Domestic Award in the 'Best House' category and the Best Syndicated Loan
Award in the 'Best Deal' category respectively.
 ICICI Bank won two awards for its Tax Payment Through Alternate Channels and Smart
Vault projects at Finnoviti 2017, a conference and award ceremony organised by the Banking
Frontiers magazine to recognise innovations in the Indian Banking, Financial Services &
Insurance (BFSI) industry.

 ICICI Bank ranked first among private sector banks in India as per Brand Equity's 'Most
Trusted Brands of 2016' survey. Brand Equity is a supplement of The Economic Times. The
Bank is the only private sector bank to be featured among the top 100 brands in this survey.

 ICICI Foundation won the 'Best CSR & Sustainability Practices Award for 2016' at the 4th
Asia Business Responsibility Summit
RESEARCH
METHODOLOGY
CHAPTER -3
 INTRODUCTION TO FUNDAMENTAL ANALYSIS

Fundamental Analysis involves examining the economic, financial and other qualitative and
quantitative factors related to a security in order to determine its intrinsic value.

It attempts to study everything that can affect the security's value, including macroeconomic
factors (like the overall economy and industry conditions) and individually specific factors
(like the financial condition and management of companies).

Fundamental analysis, which is also known as quantitative analysis, involves delving into a
company’s financial statements (such as profit and loss account and balance sheet) in order to
study various financial indicators (such as revenues, earnings, liabilities, expenses and assets).
Such analysis is usually carried out by analysts, brokers and savvy investors.

Many analysts and investors focus on a single number--net income (or earnings)--to evaluate
performance. When investors attempt to forecast the market value of a firm, they frequently
rely on earnings. Many institutional investors, analysts and regulators believe earnings are
not as relevant as they once were. Due to nonrecurring events, disparities in measuring risk
and management's ability to disguise fundamental earnings problems, other measures beyond
net income can assist in predicting future firm earnings.

Two Approaches of fundamental analysis

While carrying out fundamental analysis, investors can use either of the following
approaches:

1 .Top-down approach: In this approach, an analyst investigates both international and

national economic indicators, such as GDP growth rates, energy prices, inflation and interest
rates. The search for the best security then trickles down to the analysis of total sales, price
levels and foreign competition in a sector in order to identify the best business in the sector.

2. Bottom-up approach: In this approach, an analyst starts the search with specific businesses,
irrespective of their industry/region.
How Does fundamental analysis works ?

Fundamental analysis is carried out with the aim of predicting the future performance of a
company. It is based on the theory that the market price of a security tends to move towards
its 'real value' or 'intrinsic value.' Thus, the intrinsic value of a security being higher than the
security’s market value represents a time to buy. If the value of the security is lower than its
market price, investors should sell it.

The steps involved in fundamental analysis are:

1. Macroeconomic analysis, which involves considering currencies, commodities and indices.

2. Industry sector analysis, which involves the analysis of companies that are a part of the
sector.
3. Situational analysis of a company.
4. Financial analysis of the company.
5. Valuation

The valuation of any security is done through the discounted cash flow (DCF) model, which
takes into consideration:

1. Dividends received by investors

2. Earnings or cash flows of a company
3. Debt, which is calculated by using the debt to equity ratio and the current ratio (current
assets/current liabilities)

Benefits of fundamental analysis

Fundamental analysis helps in:

1. Identifying the intrinsic value of a security.

2. Identifying long-term investment opportunities, since it involves real-time data.

Drawbacks of fundamental analysis

The drawbacks of fundamental analysis are:

 Too many economic indicators and extensive macroeconomic data can confuse novice
investors.
 The same set of information on macroeconomic indicators can have varied effects on
the same currencies at different times.It is beneficial only for long-term investments
Fundamental Analysis Tools

These are the most popular tools of fundamental analysis.

(i) Earnings per Share – EPS

(ii) Price to Earnings Ratio – P/E
(iii) Projected Earning Growth – PEG
(iv) Price to Sales – P/S
(v) Price to Book – P/B
(vi) Dividend Payout Ratio
(vii) Dividend Yield
(viii) Book Value
(ix) Return on Equity
Ratio analysis

Financial ratios are tools for interpreting financial statements to provide a basis for valuing
securities and appraising financial and management performance.

A good financial analyst will build in financial ratio calculations extensively in a financial
modeling exercise to enable robust analysis. Financial ratios allow a financial analyst to:

 Standardize information from financial statements across multiple financial years to

allow comparison of a firm’s performance over time in a financial model.
 Standardize information from financial statements from different companies to allow
an apples to apples comparison between firms of differing size in a financial model.
 Measure key relationships by relating inputs (costs) with outputs (benefits) and
facilitates comparison of these relationships over time and across firms in a financial
model.
In general, there are 4 kinds of financial ratios that a financial analyst will use most
frequently, these are:

 Performance ratios
 Working capital ratios
 Liquidity ratios
 Solvency ratios
These 4 financial ratios allow a good financial analyst to quickly and efficiently address the
following questions or concerns:

Performance ratios

 What return is the company making on its capital investment?

 What are its profit margins?
Working capital ratios

 How quickly are debts paid?

 How many times is inventory turned?

Liquidity ratios

 Can the company continue to pay its liabilities and debts?

Solvency ratios (Longer term)

 What is the level of debt in relation to other assets and to equity?

 Is the level of interest payable out of profits?

Technical analysis is the practice of anticipating price changes of a financial instrument by

analyzing prior price changes and looking for patterns and relationships in price history.

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.

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 investor expectations, 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.
RESEARCH

Research comprises defining and redefining problems, formulating hypothesis or suggested

solutions, collecting, organizing and evaluating data, making deductions and reaching
conclusions and at last carefully testing the conclusions to determine whether they fit the
formulating hypothesis.

RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the problems. It is a way of studying
how research is done scientifically. It consists of various steps that are generally adopted by
the researcher in studying his research problems along with the logic behind them.

RESEARCH DESIGN

Research design is a framework or the blue print for conducting the research project. Research
design is the arrangement of conditions for collection and analysis of data in a manner that
aims to combine relevance to the research purpose with economy in procedure. It includes an
outline of what the researcher will do from writing the hypothesis and its operational
implications to the final analysis of data.

TYPES OF RESEARCH DESIGN

 Exploratory research design

 Descriptive research design
 Experimental research design
EXPLORATORY RESEARCH DESIGN

It is also termed as formulate research design. The main purpose of the study is to formulate a
problem for more precise investigation.

DESCRIPTIVE RESEARCH DESIGN

In descriptive research design, those studies are taken which are concerned with describing
the characteristics of a particular individual or a group.

EXPERIMENTAL RESEARCH DESIGN

In this casual relationships between the variables are tested. It is also known as hypothesis
testing research design.

Sampling design

A Sample design is a definite plan for obtaining a sample from a given population. It is the

procedure used by the researcher in selecting items for the sample.

PRIMARY DATA
Primary data are those data, which is originally collected. It is of following type’s
questionnaire, interview, observation etc.

SECONDARY DATA

Secondary data are those data which are collected and which has been passed through
statistical research.

In this project, secondary data has been collected from following sources:-

 Annual Reports
 Books
 Internet
 Other material and report published by company
Period of study

The period of the study is 5 year i.e. (2012-16). 5 year data of banks has been taken for the
analysis.

Tools

These are the most popular tools of fundamental analysis. They focus on earnings, growth,
and value in the market.

(i) Earnings per Share – EPS

(ii) Price to Earnings Ratio – P/E
(iii) Projected Earning Growth – PEG
(iv) Price to Sales – P/S
(v) Price to Book – P/B
(vi) Dividend Payout Ratio
(vii) Dividend Yield
(viii) Book Value
(ix) Ratio Analysis
(x) Liquid ratio
(xi) Turnover ratio
(xii) Valuation ratio

Techniques

The technique used in the analysis of the company is excel sheets, graphs and tables of
financial statement for example balance sheet, profit loss a/c, cash flow statement, dividend
per share, ratio analysis, valuation ratio etc.
DATA ANALYSIS
AND
INTERPRETATION
CHAPTER -4
 FUNDAMENTAL ANALYSIS

The fundamental analysis of the banking sector deals with:

 the effect of economy on the banking sector in the economic analysis,

 the baking industry as a whole in industrial analysis,
 the analysis of seven selected banking companies in company analysis.

ECONOMIC ANALYSIS

GDP

 Economic analysis deals with forces operating in the economy which influences the
banking sector. Any economy is best described by its GDP. Indian economy is the
second fastest growing economy in the world.
 The global financial system is still far away from a full recovery on account of a
slowdown in the US economy, the soft landing in China and the Euro debt crisis. The
Indian banking sector has been relatively well shielded by the central bank and has
managed to sail through most of the crisis. But, currently in light of slowing domestic
GDP growth, persistent inflation, asset quality concerns and elevated interest rates, the
investment cycle has been wavering in the country.
 The cost of borrowings was higher on account of the various monetary tightening
measures undertaken by the central bank. People preferred to park their funds in higher
yielding fixed deposits rather than current or savings account (CASA). CASA
accretion slowed for most banks which led to a higher cost of funds. The savings bank
account rate was deregulated by the RBI, however most banks continue to hold the rate
at 4%.
 Apart from streamlining their processes through technology initiatives such as ATMs,
telephone banking, online banking and web based products, banks also resorted to cross
selling of financial products such as credit cards, mutual funds and insurance policies to
augment their fee based income. They are also looking at various financial inclusion
initiatives in order to spread the use of financial services among India’s large unbanked
population.
 The RBI had to revise its target for credit growth in FY16 a number of times given the
external environment. From starting off with a prediction of 19% credit growth in May
2015, the central bank brought this estimate down to 16% in January 2016. Finally
non-food credit growth came in at around 17% in FY16 compared to 21.5% in FY15.
Against a backdrop of GDP growth deceleration, weak IIP data and persistent inflation
banks became more risk averse to lending credit. This deceleration also reflects banks’
risk aversion in face of rising NPAs and increased leverage of corporate balance
sheets.
 Credit growth decelerated across all bank groups during 2015-16 ranging between
16.3% in the case of public sector banks and 19.7% for private sector banks. The
comparable figures for the previous year were 21% and 24.7% respectively.
 The RBI’s has not yet rolled back its aggressive interest rate policy and rates continue
to be elevated. The repo rate currently stands at 8%, with the reverse repo rate at 7%.
While inflation continues to remain high the RBI has refrained from any further hikes
in order to address the slowdown in growth. It may ease rates once inflation comes
under control.
 Growth on the deposit front however remained relatively low coming in at around
13% YoY in FY16; this was as against an RBI target of 17%. Fixed deposits saw good
growth, while demand deposits saw a deceleration on lower yields. The outstanding
credit-deposit ratio rose from 74.5% FY15 to 76.7% in FY16.
 In the retail portfolio, while home loans grew by 12% YoY, while vehicle loans grew
by 20%. Overall Other personal loans enjoyed a much smaller growth of 8% YoY due
to bank’s reluctance towards uncollateralized credit. Credit card outstanding grew by
13% YoY.
 Indian banks, however, saw lower levels of money supply, and deposits as a
percentage of GDP in FY16 as compared to that in FY15 on account of the uncertain
economic environment. However credit as a % of GDP was higher as GDP growth
slowed.

 Most private sector banks had a relatively better outing in FY16. Increased pricing
power helped some of these banks sustain their net interest margins. Plus they were
also able to sustain their asset quality.
 Net non performing assets (NPAs) in the system increased from 0.9% in FY15 to
1.2% in FY16. However for PSU banks this ratio increased from 1% in FY15 to 1.5%
in FY16. Increased provisioning affected the profitability of the banks in question.
 INDUSTRIAL ANALYSIS

Banks in India can be categorized into non-scheduled banks and scheduled banks. Scheduled
banks constitute of commercial banks and co-operative banks. There are 62 scheduled
commercial banks. Among these, 25 banks are public sector banks in which government has
the major stake. There are 24 private and 13 foreign sector banks operating in India. The
commercial banks in India have an extensive network of branches all across the country.
Nearly 78% of the banking industry asset is with the public sector bank.

PORTER FIVE FORCES MODEL

 Bargaining power suppliers: It is high in the periods when there is tight liquidity.
Being a service sector, human capital is one of the most important supplies to the
sector. Public sector banks in India have big trade unions which are having high
bargaining power. Establishment of well functioning capital market in India has given
a choice to the depositors to invest instead of saving. Moreover, with the deregulation
of the interest rate suppliers bargaining power has considerably increased.
 Bargaining power of customers: With large number of banks operating in India, the
bargaining power of creditworthy borrowers is high. Development of capital markets
in India has given an additional option to the businesses in India to source their funds.
 Threat of substitute products: With development well functioning capital market in
India, investors have an opportunity to direct their savings into investment
opportunities whenever they decide so. Even Corporate have an option of raising their
capital through public issues, than for taking debt from banking companies.
 Threat of new entrant: After changes made in the regulation of the banks, many new
private are coming up and foreign banks are considering entering India. Now RBI is
coming up with new guidelines for NBFC’s who wishes to start commercial banking
operations.
 Competition Rivalry: Competition in banking sector is high due to presence of public
sector, private sector banks and foreign banks along with non banking financial
companies.
 REACH

Reach
40000
35000
30000
No . of Branches

25000
20000
15000
10000
5000
0
Rural Semi-Urban Urban Metropolitan
Reach 36356 25795 18381 17396

India may be one of the most populous countries on earth, but a small proportion of its
population has access to a bank branch. As the case for financial inclusion grows, lenders are
clamouring to take advantage of what has been described as 'the largest banking opportunity
in the world'.

Findings

By the end of March 2015, near about 36000 banks reach rural areas, 26000 in semi urban
areas, 18000 in urban area and 17000 banks in metropolitan area. Still large population of the
country is still left to be covered by the banking sector. ICICI, a private sector bank has
extensively started its operation in the rural areas. Similarly foreign sector banks are spending
heavily to increase their operations in India.
 GROWTH

Growth
40000

35000

30000
No. of Branches

25000

20000

15000

10000

5000

0
2012 2013 2014 2015 2016
Rural 31076 31667 32624 33683 36356
Semi-Urban 17675 18969 20740 22843 25797
Urban 14391 15733 17003 17490 18781
Metropolitan 12908 14178 15026 16247 17396

The figure shows the year on year growth average of banks in India. The banks included are;
All Private and public sector banks.

Findings
The figure clearly depicts the phenomenal growth rate that banking industry has achieved
over the years. Growth rate shows that Banking Industry is still in its growth phase of life
cycle in India. It is opposed to what the general perception of the people had about Indian
Banking Industry to be in mature phase with very little opportunity of growth.
 RISK INVOLVED IN THE BANKING SECTOR

The risks associated with providing banking services differ by the type of service rendered.
Risk is the danger of an adverse deviation in the actual result from an expected result. High
returns are said to also accompany high risk. So the risks involved in the banking sector are:

CREDIT RISK

MARKET RISK

OPERATIONAL RISK

LIQUIDITY RISK

OTHER RISKS

CREDIT RISK

CREDIT RISK Credit risk is defined as the potential that a bank borrower or counterparty
will fail to meet its obligations in accordance with agreed terms. It is the negative
consequence associated with the defaults or non- fulfilment of concluded contracts in lending
operations due to deterioration in the counterparty’s credit quality. The goal of credit risk
management is to maximize a bank's risk-adjusted rate of return by maintaining credit risk
exposure within acceptable parameters. Banks need to manage the credit risk inherent in the
entire portfolio as well as the risk in individual credits or transactions. Banks should also
consider the relationships between credit risk and other risks. The effective management of
credit risk is a critical component of a comprehensive approach to risk management and
essential to the long-term success of any banking organization. It consists of:

1. Counterparty default risk: this refers to the possibility that the other party in contract
in an agreement will default.
2. Securitization risk: in recent world crisis that led to global recession was started due to
improper management of the securitization risks. Securitization is a process of
distributing risk by aggregating debt instruments in a pool and then issuing new
securities backed by the pool. There are two types of securitizations viz., ‘traditional’
and ‘synthetic’ securitizations. A ‘traditional’ securitization is one in which an
originating bank transfers a pool of assets that it owns to an arm’s length special
 purpose vehicle. Conversely, a ‘synthetic’ securitization is one in which an originating
bank transfers only the credit risk associated with underlying pool of assets through
the use of credit-linked notes or credit derivatives while retaining the legal ownership
of the pool of assets.
3. Concentration risk: it is any single exposure or group of exposures with the potential
to produce losses large enough (relative to bank’s capital, total assets, or overall risk
level) to threaten a bank’s health or ability to maintain its core operations.

MARKET RISK

Market risk is the risk of possible losses in, on- balance sheet and off balance sheet positions,
due to movement in the market prices. The market risk positions, subject to capital charge
requirement, are:

1. Interest Rate Risk (IRR): The risks pertaining to interest rate related instruments and
equities in the trading book. IRR is defined as the change in bank’s portfolio value due
to interest rate fluctuations. The IRR management in concerned with measurement and
control of risk exposures, both in trading book (i.e. assets that are regularly traded and
are liquid in nature) and the banking book (i.e. assets that are usually held till maturity
and rarely traded).
2. Equity Price Risk: the risk arising due to fluctuation in market prices of equity due to
general-market related operations.
3. Foreign exchange risk throughout the bank. The risk arises due to fluctuation in the
exchange rate.

OPERATIONAL RISK

Operational risk is defined as the risk to loss resulting from inadequate or failed internal
processes, people and systems or external events. This does not include strategic and
reputational risk. Some of the factors for operational risk could be lack of competent
management or proper planning and controls, incompetent staff, indiscipline, involvement of
staff in frauds, outdated systems, non-compliance, programming errors, failure of computer
systems, increased competition, deficiency in loan documentation etc.

LIQUIDITY RISK

Liquidity risk arises from the bank’s inability to meet its obligation when they come due. The
various types of liquidity risks are:
 1. Term Liquidity Risk: this risk arises due to unexpected prolongation of the capital
commitment period in lending transactions. It is the unexpected delay in the repayment.
2. Withdrawal/Call Risk: it is the risk that more deposits will be withdrawn than expected.
When large amount of deposits are taken away from the bank in a relatively span of
time, it raises the risk that bank will not be able to meet all its obligations.
3. Structural Liquidity Risk: it is the risk that rises when the necessary funding
transactions cannot be carried out. The risk is sometime also called as funding liquidity
risk.
4. Contingent Liquidity Risk: it is the risk associated with funding additional funds or
replacing maturing liabilities under potential, future stressed market conditions.
5. Market Liquidity Risk: this is a risk which arises when positions cannot be sold within
desired time period or could only be sold at a discount. This is especially the case with
securities/derivatives in illiquid markets, or when bank hold such a large positions that
they cannot be easily sold.

OTHER RISKS

1. Strategic Risk: it refers to the negative impact on capital and earnings due to business
policy decisions, changes in the macroeconomic environment, insufficient
implementation of decisions or failure to adopt in the changing economic environmental
conditions.
2. Reputation Risk: it is the potential adverse effect that a bank can have if its reputation
deviates negatively from its expected position. A bank’s reputation refers to its image in
the eyes of interested public; the stakeholders.
3. Capital Risk: it is the imbalance in the internal capital structure in relation to the nature
and size of the bank, or from difficulties associated with raising additional risk coverage
capital quickly, if necessary.
4. Earnings Risk: this risk arises due to inadequate diversification of bank’s earnings or its
inability to attain sufficient and lasting profitability.
 COMPANY ANALYSIS

For analysis of banking companies, five banks were selected. The selection of these
companies was on the basis of the unique shareholding pattern of those companies. The
shareholders in a banking company are divided into six groups. These are Indian Promoters,
Foreign collaborators, Indian inst/Mutual Fund, Foreign Institutional Investors, Global
Depository Receipts (GDRs)/American Depository Receipts (ADRs), free float.

SHAREHOLDING PATTERN

Shareholding pattern reveals how the shares of a company are divided among the various
bodies that constitute its ownership.

Before buying any stock, we research the company from all possible angles. We take into
account the company’s profit and loss, sales and debt, among other things and thus, try to
gather as much information as possible about the business into which we are going to invest
our hard-earned money so as to avoid nasty surprises in the future.

This is also important because when we buy a share, we are not just buying a piece of paper,
but also becoming a part owner of the business to the extent of the shareholding percentage.

Here, I am presenting the shareholding pattern of five banks i.e. State bank of India, Punjab
National Bank, HDFC Bank, ICICI Bank and Bank of Baroda.
 State Bank of India

Name of the Holder Equity Held (%)

Indian Promoters 61.6
Foreign Collaborators 0.0
Indian Inst/Mutual Funds 17.1
Foreign Institutional Investors 8.7
Global Depository Receipts (GDRs)/American Depository Receipts (ADRs) 2.5
Free float. 10.1

ADR/GDR, 2.5 Free

float,
10.1

FIIs, 8.7

Indian Indian
inst/Mu Promoters,
t Fund, 61.6
17.1

INTERPRETATION

The Government of India owns 61.6% stake in SBI, 17.1% equity is held by the Indian
inst/mutual funds, 8.7% equity is held by the foreign institutional investors, 2.5% held by
ADR/GDR and remaining 10.1 % equity is held by the free float.

 State Bank of India (SBI) is India’s largest and oldest commercial bank in terms of
profits, assets, deposits, branches and employees. It has a market share of about 16.4%
in deposits and advances.
 SBI accounts for almost one-fifth of the nation's loans.
 Punjab National Bank

Name of the Holder Equity Held (%)

Indian Promoters 56.1
Foreign Collaborators 0.0
Indian Inst/Mutual Funds 21.8
Foreign Institutional Investors 17.4
Global Depository Receipts (GDRs)/American Depository Receipts (ADRs) 0.0
Free float. 4.7

Free
float,
10.1

FIIs, 17.4
Indian
Promoters,
Indian inst/Mut 56.1
Fund, 21.8

INTERPRETATION

The Government of India owns 56.1% equity, 21.8% equity is held by the Indian
inst/mutual funds, 17.4% equity is held by the foreign institutional investors and remaining
4.7% equity is held by the free float.

 Punjab National Bank (PNB) is the second largest public bank in India after SBI in
terms of branch, network and business.
 The bank has 5.18% market share in deposits and 5.11% market share in credit.
 Punjab National Bank provides services through a network of 5,874 branches and
6,313 ATMs in India spread over all states/union territories.
 HDFC Bank

Name of the Holder Equity Held (%)

Indian Promoters 22.8

Foreign Collaborators 0.0

Indian Inst/Mutual Funds 8.6

Foreign Institutional Investors 34.1

Global Depository Receipts (GDRs)/American Depository Receipts (ADRs) 17.1

Free float. 17.4

Free
float,
10.1
Indian
Promoters,
ADR/GDR,
22.8
17.1

Indian inst/Mut
Fund, 8.6

FIIs, 34.1

INTERPRETATION

The Government of India owns 22.8% stake in HDFC, 8.6% equity is held by the Indian
inst/mutual funds, 34.1% equity is held by the foreign institutional investors, 17.1% held by
ADR/GDR and remaining 10.1 % equity is held by the free float.

 The Government of India owns 22.8% stake in HDFC Bank.

 Foreign Institutional Investors owns 34.1% Stake in HDFC Bank.
 The business philosophy of HDFC Bank is based on four core values - Customer
Focus, Operational Excellence, Product Leadership and People.
 ICICI Bank

Name of the Holder Equity Held (%)

Indian Promoters 0.0
Foreign Collaborators 0.0
Indian Inst/Mutual Funds 26.6
Foreign Institutional Investors 35.9
Global Depository Receipts (GDRs)/American Depository Receipts (ADRs) 26.9
Free float. 10.6

Free
float,
10.6

Indian inst/Mut
Fund, 26.6
ADR/GDR,
26.9

FIIs, 35.9

INTERPRETATION

26.6% equity is held by the Indian inst/mutual funds, 35.9% equity is held by the foreign
institutional investors, 26.9% held by ADR/GDR and remaining 10.6 % equity is held by the
free float.

 ICICI Bank is India’s second largest bank and largest private sector bank, with
total assets of Rs. 5367.95 billion as on March 31, 2015.
 ICICI Bank provides services through a network of 3,121 branches and 10,486 ATMs
in India spread over all states/union territories.
 The Government of India owns 26.6% stake in ICICI.
 Bank of Baroda

Name of the Holder Equity Held (%)

Indian Promoters 54.3
Foreign Collaborators 0.0
Indian Inst/Mutual Funds 20.5
Foreign Institutional Investors 13.5
Global Depository Receipts (GDRs)/American Depository Receipts (ADRs) 0.0
Free float. 11.7

Free
float,
11.7

FIIs, 13.5
Indian
Promoters,
Indian inst/Mut 54.3
Fund, 20.5

INTERPRETATION

The Government of India owns 54.3% stake in BOB, 20.5% equity is held by the Indian
inst/mutual funds, 13.5% equity is held by the foreign institutional investors and remaining
11.7 % equity is held by the free float.

 BoB provides services through a network of 3,904 branches and 2,012 ATMs in India
spread over all states/union territories.
 BoB's international business accounts for around 14.05% of bank's total business
 It is one of the Indian banks with the most significant international presence
 Comparison of Price of shares (2012-16)

Highest price of Shares

4000

3500

3000
Price of shares (Rs)

2500

2000

1500

1000

500

0
2012 2013 2014 2015 2016
SBI 1840 2500 3515 2960 2961
PNB 580 1017 1268 1234 943
HDFC 1575 1986 2518 540 705
ICICI 961 960 1270 1128 1214

INTERPRETATION

The Chart shows highest price of the shares of five banks i.e. SBI, PNB, HDFC, ICICI and
BOB in last five years. Among these, SBI and HDFC have touched the highest price i.e. ₹
3515 and 2518 respectively in the year 2011. The price all the banks have increased rapidly
from 2012-2016 but in 2016 their market price have not touch the highest level as compare to
the year 2014. SBI and ICICI bank now have the highest price of share (1st Aug. 2016).
 Comparison of Price of shares(2012-2016)

Lowest price of Shares

2500

2000
Price of shares ₹

1500

1000

500

0
2012 2013 2014 2015 2016
SBI 894 980 2015 1576 1640
PNB 286 394 933 751 659
HDFC 774 952 1785 427 482
ICICI 253 349 809 652 782
BOB 181 227 616 630 606

INTERPRETATION

The Chart shows lowest price of the shares of five banks i.e. SBI, PNB, HDFC, ICICI and
BOB in last five years.
 EARNINGS PER SHARE

250

200

150
Earnings in ₹

100

50

0
2011 2012 2013 2014 2015
SBI 141.9 172.6 184.8 168.3 228.6
PNB 101.4 126 144.4 148.2 140.2
HDFC 52.9 65.6 85.8 22.4 28.9
ICICI 32.1 41.9 52.9 66.3 83.2
BOB 68.5 87.3 113.2 127.7 114

INTERPRETATION

ICICI Bank’s Profits have grown by 30% (QoQ i.e. last year same quarter vs current year
quarter) in Q2-FY15 and 25% (YoY) in FY14. EPS is growing year on year ₹ 32 in 2008 vs ₹
83 in 2015.

SBI’s EPS is growing year on year ₹ 141 for FY2008 vs ₹ 228 in FY2015. Estimated EPS for
FY15 is ₹ 214 and FY16 is ₹ 248 which indicates that profits would grow in future.

The EPS of HDFC bank and is decreased from ₹ 52.9 in 2008 vs. ₹ 22.4 in2014 but it has
increase to ₹ 28.9 in 2015.
 DEBT EQUITY RATIO

250

200

150
X

100

50

0
2012 2013 2014 2015 2016
SBI 141.9 172.6 184.8 168.3 228.6
PNB 101.4 126 144.4 148.2 140.2
HDFC 52.9 65.6 85.8 22.4 28.9
ICICI 32.1 41.9 52.9 66.3 83.2
BOB 68.5 87.3 113.2 127.7 114

A measure of a company's financial leverage calculated by dividing its total liabilities by

stockholders' equity, it indicates what proportion of equity and debt the company is using to
finance its assets. A high debt/equity ratio generally means that a company has been
aggressive in financing its growth with debt. This can result in volatile earnings as a result of
the additional interest expense.

INTERPRETATION

Banks in India has an average of Debt to Equity ratio of 11.86. Banks like HDFC, ICICI and
can raise more capital when required as their ratio is less than 11.89. On the other hand SBI,
PNB and BOB will have problem in borrowing the money as they are highly leveraged.
 Net Non Performing Assets (NPA)

2.5

2
%

1.5

0.5

0
2012 2013 2014 2015 2016
SBI 1.8 1.8 1.7 1.6 1.8
PNB 0.2 0.5 0.9 1.5 2.4
HDFC 0.6 0.3 0.2 0.2 0.2
ICICI 2.1 2.1 1.1 0.7 0.8
BOB 0.3 0.3 0.4 0.5 1.3
INTERPRETATION

Net Non Performing Assets to total advances of each bank is well within the trigger level of
RBI. HDFC Bank being most conservative player in the field is having the lowest value of the
ratio. ICICI bank through large amount of provision has managed to lower the net Non
Performing Assets to acceptable level. BOB’s Net NPA ratio stood at 1.69 percent compared
to 0.65 percent during the same period last year. The bank’s total deposits increased by 22
percent to Rs 4.67 lakh crore in June 2016.
 FINDINGS

State Bank Of India

 The revenue growth for FY15 and FY16 is expected at 14-15%.

 SBI managed to maintain a six-year-average ROA (Return on assets) at 0.88% on a
consolidated basis, which is significantly below the benchmark of 1.25%.
 The non-performing assets to net advances ratio has decreased from 4.5% in FY03 to
1.82 in FY15 which shows the continuous improvement in its assets quality; but, it is
still not up to the mark.
 At the end of Financial Year 2015, its capital adequacy ratio was at 13.86% which is
drastically improved as comparison to 12% for last year

Punjab National Bank

 PNB managed to maintain a six-year-average ROE (Return on Equity) in excess of

20%, with RoE as on Mar’16 standing at 20.35%.
 The non-performing assets to net advances ratio has increased from 0.2% to 2.4% in
the last five years. This shows that the assets quality of the Bank has deteriorated.
 PNB has a capital adequacy ratio of 12.72% as on Mar’16.

HDFC Bank

 HDFC Bank increased its net interest income by 17.72% in FY15 on the stand-alone
basis.
 The Bank has increased its book value per share by 17.06% in FY15.
 HDFC Bank managed to maintain a ten-year-average ROA (Return on assets) at
1.77% in FY15, which is significantly higher than the benchmark of 1.25%.
 The non-performing assets to net advances ratio of the bank have been continuously
below 0.6%, which shows its asset quality is very good.
 Net non-performing assets remained at 0.2% of net advances as on March 31, 2016.
ICICI Bank

 ICICI Bank managed to attain ROE (Return on Equity) of 13.62% in FY15.

 The net non-performing assets to net advances ratio of the bank have been
continuously above 1% in the last five years, which shows its asset quality is not up to
the mark.
 This shows it is continuously improving its asset quality with a large focus on it.

Bank of Baroda

 The Bank has increased its book value per share by 16.81% in the last 10 years, from
Rs.149.04 in FY03 to Rs.664.08 in FY15.
 BoB managed to maintain a Five-year-average ROE (Return on Equity) in excess of
20%, with RoE as on Mar’15 standing at 21.26%.
 BoB has a capital adequacy ratio of 14.67% as on Mar’15.
 RECOMMENDATIONS

State Bank of India

 Buy if the Stock price goes below Rs.1, 497.74, for an Aggressive Investor. Otherwise
a good entry point for medium to long term Investment would be Rs.1, 331.32.
 One can sell if the Stock price reaches Rs.1, 665.00, for an Aggressive Investor.
Otherwise a good upside target for medium to long term Investment would be Rs.1,
774.00.
 Based on Historical performance of this stock, a Stop Loss of Rs.53.61 below the
CMP is recommended. A Trailing Stop Loss is even better, if available.

Punjab National Bank

 Buy if the Stock price goes below Rs.515.10, for an Aggressive Investor. Otherwise a
good entry point for medium to long term Investment would be Rs.432.44.
 One can sell if the Stock price reaches Rs.543.85, for an Aggressive Investor.
Otherwise a good upside target for medium to long term Investment would be
Rs.596.70.
 Based on Historical performance of this stock, a Stop Loss of Rs.23.63 below the
CMP is recommended. A Trailing Stop Loss is even better, if available.

HDFC Bank

 Buy if the Stock price goes below Rs.549.45, for an Aggressive Investor. Otherwise a
good entry point for medium to long term Investment would be Rs.488.40.
 One can Sell if the Stock price reaches Rs.615.35, for an Aggressive Investor.
Otherwise a good upside target for medium to long term Investment would be
Rs.634.30.
 Based on Historical performance of this stock, a Stop Loss of Rs.15.33 below the
CMP is recommended. A Trailing Stop Loss is even better, if available.
 Note: All the Technical Analysis above is with Swing Trading in Mind (few days
delivery based trades ONLY). This may also be good for Intraday (Day Trade) though
ICICI Bank

 This is one of the best stocks to buy in India for long term objective.
 Buy if the Stock price goes below Rs.787.55, for an Aggressive Investor. Otherwise a
good entry point for medium to long term Investment would be Rs.700.04.
 One can sell if the Stock price reaches Rs.909.50, for an Aggressive Investor.
Otherwise a good upside target for medium to long term Investment would be
Rs.944.35.
 Based on Historical performance of this stock, a Stop Loss of Rs.28.71 below the
CMP is recommended. A Trailing Stop Loss is even better, if available.

Bank of Baroda

 Buy if the Stock price goes below Rs.482.05, for an Aggressive Investor. Otherwise a
good entry point for medium to long term Investment would be Rs.410.44.
 One can sell if the Stock price reaches Rs.518.95, for an Aggressive Investor.
Otherwise a good upside target for medium to long term Investment would be
Rs.539.80.
 Based on Historical performance of this stock, a Stop Loss of Rs.22.01 below the
CMP is recommended. A Trailing Stop Loss is even better, if available.
 LIMITATIONS

 All banks are not included.

 Dynamic market leads to inaccurate data.
 The project study is restricted to banking sector used in India only.
 The project was constrained by time limit of two months.
 Lack of source of information.
 Since annual reports give the condition of the banks on an annual basis, these may not
reflect the current positions of the bank.
 Good time & effort were spent in analyzing the data.
 The major limitation of this study shall be data availability as the data is proprietary and
not readily shared for dissemination.
 CONCLUSIONS
 Indian Banking Industry has gone through various phases of development in history.
 The present growth in the banking sector can be attributed to the various financial
reforms undertaken by the government.
 Banking companies are having more than sufficient capital to shield itself from risk
weighted assets.
 The deposits of banking companies are increasing with increase in GDP at market
price.
 Statutory requirement is being used as tool by RBI to keep inflation under check.
 Past five year has seen an average growth of nearly 30% in Profit after Tax of the
banking companies
 Non Performing Assets Ratio of Indian banking companies is around 1.2%, well
below the RBI set danger level of 10%.
 Banking companies in India differs in the shareholding pattern.
 Among the banks selected analysis and methodology adopted for the analysis, HDFC
bank is the best bank followed by State Bank of India.
 BIBLIOGRAPHY

http://www.investopedia.com/
http://equitymaster.com/
http://www.moneyworks4me.com/
http://money.rediff.com/
http://www.moneycontrol.com/
http://www.wikipedia.org/
http://slideshare.cpm
http://scribd.com
http://managementparadise.com
http://economictimes.indiatimes.com
http://www.rbi.org.in/home.aspx
http://dbie.rbi.org.in
Annual Reports issued RBI.
Database of banks issued by RBI