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FUNDAMENTAL ANALYSIS
(Chapter-1)
What is analysis?
1
The examination and evaluation of the relevant information to select the best
course of action from among various alternatives. The methods used to
analyze securities and make investment decisions fall into two very broad
categories: fundamental analysis and technical analysis. Fundamental
analysis involves analyzing the characteristics of a company in order to
estimate its value. Technical analysis takes a completely different approach;
it doesn't care one bit about the "value" of a company or a commodity.
Technicians (sometimes called chartists) are only interested in the price
movement in the market.
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.
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 securitys market value
represents a time to buy. If the value of the security is lower than its market
price, investors should sell it.
securities
and
appraising
financial
and
management
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
investment? What are its profit margins?
on
its
capital
Liquidity ratios
Can the company continue to pay its liabilities and debts?
Business insights
One of the most obvious, but less tangible, rewards of fundamental analysis is
the development of a thorough understanding of the business. After such
pains taking research and analysis, an investor will be familiar with the key
revenue and profit drivers behind a company. Earnings and earnings
expectations can be potent drivers of equity prices. Even some technicians
will agree to that.
A good understanding can help investors avoid companies that are prone to
shortfalls and identify those that continue to deliver. In addition to
understanding the business, fundamental analysis allows investors to
develop an understanding of the key value drivers and companies within an
industry. A stock's price is heavily influenced by its industry group. By
studying these groups, investors can better position themselves to identify
opportunities that are high-risk (tech), low-risk (utilities), growth oriented
(computer), value driven (oil), non-cyclical (consumer staples), cyclical
(transportation) or income-oriented (high yield).
little in the charts that tell us why a group of people make the choices that
create the price patterns
History
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.
9
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. The merger was approved by shareholders of ICICI and ICICI Bank in
January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by
the High Court of Judicature at Mumbai and the Reserve Bank of India in April
2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity.
PROMOTERS
ICICI Bank
ICICI Bank Limited (NYSE:IBN) is India's leading private sector bank, with
consolidated total assets of Rs 8260.79 bn. as at March 31, 2015. ICICI Bank's
subsidiaries include India's leading private sector insurance companies, the
largest online retail brokerage and among its largest mutual funds and private
equity firms. ICICI Bank's presence currently spans 17 countries, including India.
10
Our vision:
To be the dominant Life, Health and Pensions player built on trust by world-class
people and service.
This we hope to achieve by:
Understanding the needs of customers and offering them superior products and
service;
Leveraging technology to service customers quickly, efficiently and conveniently ;
Developing and implementing superior risk management and investment
strategies to offer sustainable and stable returns to our policyholders;
Providing an enabling environment to foster growth and learning for our
employees;
And above all, building transparency in all our dealings.
Our values:
subsidiar
ICICI Prudential Life Insurance Company Limited
ICICI Lombard General Insurance Company Limited
ICICI Prudential Asset Management Company Limited
11
International
ICICI Bank USA
ICICI Bank UK PLC
ICICI Bank Canada
ICICI Bank Eurasia Limited Liability Company
ICICI Securities Holdings Inc.
ICICI Securities Inc.
ICICI International LImited
12
Retail Financial Services awards 2014' and Technology Implementation Award for
Lending Platform Implementation by The Asian Banker.[76][77]
2015
ICICI Bank won an award in the BFSI Leadership Summit & Awards in the 'Best
Phone Banking for End-users category[78]
ICICI Bank won in six categories and was the first runner-up in one category
among Private Sector Banks at IBA Banking Technology Awards, 2015. The bank
was declared winner in the six categories of Best Technology Bank of the Year,
Best use of Data, Best Risk Management Initiatives, Best use of Technology in
Training, Human Resources and e-Learning initiatives, Best Financial Inclusion
Initiative and Best use of Digital and Channels Technology. ICICI Bank was the
first runner-up in Best use of Technology to Enhance Customer Experience[79]
ICICI Bank has been declared as the first runner up at Outlook Money Awards
2015 in the category of Best Bank
ICICI Bank has been adjudged the Best Retail Bank in India by The Asian Banker.
It has also emerged winners in the categories of Best Internet Banking Initiative
and Best Customer Risk Management Initiative awards given by The Asian
Banker.[80]
14
15
Industry Analysis
(Chapter-3)
16
Product lines
Product growth
Complementary product
Economics of scale
Suppliers
Labors
Substitute products
Buyers and their behavior
Product pattern (cyclical, seasonal)
Cost structure
17
Liberalizatio
n
The new policy shook the Banking sector in India completely. Bankers, till this
time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4)
of functioning. In the early 1990s the then Narsimha Rao government embarked
on a policy of liberalization and gave licenses to a small number of private banks,
which came to be known as New Generation tech-savvy banks, which included
banks such as Global Trust Bank (the first of such new generation banks to be set
18
up) which later amalgamated with Oriental Bank of Commerce, UTI Bank (now renamed as Axis Bank), ICICI Bank and HDFC Bank.
Current situation
Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector
banks (that is with the Government of India holding a stake), 29 private banks
(these do not have government stake; they may be publicly listed and traded on
stock exchanges) and 31 foreign banks. They have a combined network of over
67,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a
rating agency, the public sector banks hold over 78 percent of total assets of the
banking industry, with the private and foreign banks holding 18.2% and 6.5%
respectively.
Over the last four years, Indias economy has been on a high growth trajectory,
creating unprecedented opportunities for its banking sector. Most banks have
enjoyed high growth and their valuations have appreciated significantly during
this period. Looking ahead, the most pertinent issue is how well the banking
sector is positioned to cater to continued growth. A holistic assessment of the
banking sector is possible only by looking at the roles and actions of banks, their
core capabilities and their ability to meet systemic objectives, which include
increasing shareholder value, fostering financial inclusion, contributing to GDP
growth, efficiently managing intermediation cost, and effectively allocating
capital and maintaining system stability.
19
the taking over of the seven associated banks as its subsidiary. Second the
nationalization of 14 major commercial banks in 1969and last the nationalization
of 6 more commercial Bank in 1980. Thus 27 banks constitute the Public Sector
Banks.
20
"Scheduled banks in India" means the State Bank of India constituted under
the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined
in the State Bank of India (Sub sidiary Banks) Act, 1959 (38 of 1959), a
corresponding new bank constituted under section 3 of the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970),
or under section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included
in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but
does not include a co-operative bank". "Non-scheduled bank in India" means a
banking company as defined in clause (c) of section 5 of the Banking Regulation
Act, 1949 (10 of 1949), which is not a scheduled bank".
Cooperative Banks
Besides the commercial banks, there exists in India another set of banking
institutions called cooperative credit institutions. These have been made in
existence in India since long. They undertake the business of banking both in
urban and rural areas on the principle of cooperation. They have served a
useful role in spreading the banking habit throughout the country. Yet, there
financial position is not sound and a majority of cooperative banks has yet to
achieve financial viability on a sustainable basis.
The cooperative banks have been set up under various Cooperative Societies
Acts enacted by State Governments. Hence the State Governments regulate
these banks. In 1966, need was felt to regulate their activities to ensure their
soundness and to protect the interests of depositors According to the RBI in
March 2011, number of all Scheduled Commercial Banks (SCBs) was 171 of
which, 86 were Regional Rural Banks and the number of Non-Scheduled
Commercial Banks including Local Area Banks stood at 5. Taking into account
all banks in India, there are overall 86,640 branches or offices, 1,093,356
employees and 35,088 ATMs. Public sector banks made up a large chunk of
the infrastructure, with 87.7 per cent of all offices, 82 per cent of staff and
60.3 per cent of all automated teller machines (ATMs).
21
WEAKNESS
Public Sector Banks need to fundamentally strengthen institutional skill levels
especially in sales and marketing, service operations, risk management and
the overall organizational performance ethic & strengthen human capital.
Old private sector banks also have the need to fundamentally strengthen skill
levels.
The cost of intermediation remains high and bank penetration is limited to only a
few customer segments and geographies.
Structural weaknesses such as a fragmented industry structure, restrictions
on capital availability and deployment, lack of institutional support
infrastructure, restrictive labour laws, weak corporate governance and
22
OPPORTUNITIES
The market is seeing discontinuous growth driven by new products and
services that include opportunities in credit cards, consumer finance and
wealth management on the retail side, and in fee-based income and
investment banking on the wholesale banking side. These require new skills
in sales & marketing, credit and operations.
With increased interest in India, competition from foreign banks will only
intensify.
Given the demographic shifts resulting from changes in age profile and
household income, consumers will increasingly demand enhanced
institutional capabilities and service levels from banks.
New private banks could reach the next level of their growth in the Indian
banking sector by continuing to innovate and develop differentiated business
models to profitably serve segments like the rural/low income and
affluent/HNI segments; actively adopting acquisitions as a means to grow and
reaching the next level of performance in their service platforms. Attracting,
developing and retaining more leadership capacity.
Foreign banks committed to making a play in India will need to adopt
alternative approaches to win the race for the customer and build a valuecreating customer franchise in advance of regulations potentially opening up
post 2009.
Reach in rural India for the private sector and foreign banks
Liberalization of ECB norms: The government also liberalised the ECB
norms to permit financial sector entities engaged in infrastructure funding to
raise ECBs. This enabled banks and financial institutions, which were earlier
23
not permitted to raise such funds, explore this route for raising cheaper funds
in the overseas markets.
Hybrid capital: In an attempt to relieve banks of their capital crunch, the
RBI has allowed them to raise perpetual bonds and other hybrid capital
securities to shore up their capital. If the new instruments find takers, it
would help PSU banks, left with little headroom for raising equity.
THREATS
Threat of stability of the system: failure of some weak banks has often
threatened the stability of the system.
Rise in inflation figures which would lead to increase in interest rates.
Increase in the number of foreign players would pose a threat to the Public
Sector Bank as well as the private players.
Key players
Andhra Bank
Allahabad Bank
Vijaya Bank
HDFC Bank
UTI Bank
ICICI Bank
Citibank
HSBC Bank
ABN AMRO
24
Company analysis
(Chapter-4)
25
26
1.Porter model
Porter's Five Forces is a framework for industry analysis and business strategy
development formed by Michael E. Porter of Harvard Business School in 1979.
It draws upon Industrial Organization (IO) economics to derive five forces that
determine the competitive intensity and therefore attractiveness of a market.
Attractiveness in this context refers to the overall industry profitability. An
"unattractive" industry is one in which the combination of these five forces
acts to drive down overall profitability. A very unattractive industry would be
one approaching "pure competition", in which available profits for all firms
are driven down to zero.
Three of Porter's five forces refer to competition from external sources. The
remainders are internal threats.
Porter referred to these forces as the micro environment, to contrast it with
the more general term macro environment. They consist of those forces close
to a company that affect its ability to serve its customers and make a profit.
A change in any of the forces normally, requires a business unit to re-assess
the marketplace given the overall change in industry information. The overall
industry attractiveness does not imply that every firm in the industry will
return the same profitability. Firms are able to apply their core competencies,
business model or network to achieve a profit above the industry average. A
clear example of this is the airline industry. As an industry, profitability is low
and yet individual companies, by applying unique business models, have
been able to make a return in excess of the industry average.
Porter's five forces include - three forces from 'horizontal' competition: threat
of substitute products, the threat of established rivals, and the threat of new
entrants; and two forces from 'vertical' competition: the bargaining power of
suppliers and the bargaining power of customers.
This five forces analysis is just one part of the complete Porter strategic models.
The other elements are the value chain and the generic strategies
27
Supplier competition - ability to forward vertically integrate and cut out the
BUYER
(e) The intensity of competitive rivalry
For most industries, the intensity of competitive rivalry is the major determinant
of the competitiveness of the industry.
Sustainable competitive advantage through innovation
Competition between online and offline companies; click-and-mortar -vslags on a bridge
Level of advertising expense
Powerful competitive strategy
The visibility of proprietary items on the Web used by a company which
can intensify competitive pressures on their rivals.
How will competition react to a certain behavior by another firm? Competitive
rivalry is likely to be based on dimensions such as price, quality, and
innovation. Technological advances protect companies from competition. This
applies to products and services. Companies that are successful with
introducing new technology are able to charge higher prices and achieve
higher profits, until competitors imitate them. Examples of recent technology
advantage in have been mp3 players and mobile telephones. Vertical
integration is a strategy to reduce a business' own cost and thereby intensify
pressure on its rival.
3. Ratio analysis:
A tool used by individuals to conduct a quantitative analysis of information in
a company's financial statements. Ratios are calculated from current year
30
numbers and are then compared to previous years, other companies, the
industry, or even the economy to judge the performance of the company.
Ratio analysis is predominately used by proponents of fundamental analysis.
There are many ratios that can be calculated from the financial statements
pertaining to a company's performance, activity, financing and liquidity.
Some common ratios include the price-earnings ratio, debt-equity ratio,
earnings per share, asset turnover and working capital.
31
32
33
RESEARCH METHODOLOGY
(Chapter-5)
34
Secondary Data
The sources of secondary data for solve the problems are:Company Annual Report
Internet-websites
Period of study
The period of the study is 5 years i.e. (2007-2012). Company 5 years data 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.
Earnings per Share EPS
Price to Earnings Ratio P/E
Projected Earnings Growth PEG
Price to Sales P/S
Price to Book P/B
Dividend Payout Ratio
Dividend Yield
35
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.
36
DATA ANALYSIS
(Chapter-6)
37
38
INDUSTRY ANALYSIS
The last decade has seen many positive developments in the Indian banking
sector. The policy makers, which comprise the Reserve Bank of India (RBI),
Ministry of Finance and related government and financial sector regulatory
entities, have made several notable efforts to Improve regulation in the
sector. The sector now compares favorably with banking sectors in the region
on metrics like growth, profitability and non-performing assets (NPAs). A few
banks have established an outstanding track record of innovation, growth
and value creation. This is Reflected in their market valuation. However,
improved regulations, innovation, growth and value creation in the sector
remain limited to a small part of it. The cost of banking intermediation in
India is higher and bank penetration is far lower than in other markets.
Indias banking industry must strengthen itself significantly if it has to
support the modern and vibrant economy which India aspires to be. While the
onus for this change lies mainly with bank managements, an enabling policy
and regulatory framework will also be critical to their success. The failure to
respond to changing market realities has stunted the development of the
financial sector in many developing countries. A weak banking structure has
been unable to fuel continued growth, which has harmed the long-term
health of their economies. In this white paper, we emphasize the need to
act both decisively and quickly to build an enabling, rather than a limiting,
banking sector in India.
Year End
PBIDT
PAT
2011
Net
Sales
2706.99
PBIDTM
%
26
PATM
%
12.94
ROCE%
ROE%
350.31
Adj.
EPS(Rs)
8.53
703.89
7.53
19.51
ICICI Bank
2011
25706.93
9732.18
4024.98
36.1
37.86
15.66
6.18
7.96
Kotak
Bank
2011
3255.62
1297
561.11
8.06
39.84
17.23
6.68
13.52
HDFC Bank
2011
16172.9
6429.73
2948.7
64.42
39.76
18.23
5.95
16.31
Axis Bank
2011
11638.02
5240.56
2514.53
62.06
45.03
21.61
6.39
19.15
40
Interpretation:
Here we can see that ICICI has highest net sales with 25706.93 cr. And PAT is
also highest among the peer group with 4027.93 cr. That means ICICI is most
favorable company to invest in terms of profit.
Description
2012
2011
2010
2009
2008
No Of Companies
74
89
83
71
68
13.31
6.22
5.02
5.63
8.28
14.23
7.44
6.09
5.38
8.14
12.87
7.21
5.87
4.69
7
12.04
6.37
5.1
4.38
6.94
11.36
6.41
4.27
4.92
7.1
Margin Ratios
Yield on Advances
Yield on Investments
Cost of Liabilities
NIM
Interest Spread
Performance Ratios
41
ROA (%)
ROE (%)
ROCE (%)
Efficiency Ratios
1.17
10.65
5.96
1.28
11.07
7.11
1.34
12.02
7.04
1.19
14.45
6.4
1.18
13.36
5.56
42.89
44.25
7.46
42.45
45.19
7.55
46.35
48.74
7.49
50.66
51.78
7.82
51.38
50.8
8.2
9.09
30.55
44.08
32.44
107.35
2.45
3.73
8.99
20.79
16.84
14.77
60.6
55.86
46.44
37.8
37.48
38.42
127.56
102.66
86.72
Loans/Deposits(x)
Cash/Deposits(x)
Investment/Deposits(x)
Inc Loan/Deposit (%)
0.2
0.09
0.47
19.63
0.26
0.07
0.44
25.72
0.22
0.1
0.43
22.28
0.18
0.07
0.41
17.58
0.19
0.06
0.43
18.73
Interpretation
42
2012
2011
2010
2009
2008
No of Companies
Interest Earned
Other Income
Total Income
Interest Expended
Operating Expenses
Provisions and
Contingencies
Profit Before Tax
Taxes
Total
Profit After Tax
Extra items
98
135486.15
35136.24
170622.38
78145.22
38681.01
19010.41
74
113327.71
29599.54
142927.25
65332.36
33282.45
16440.68
89
136806.93
35299.77
172106.71
84711.83
36938.65
16710.7
83
107590.8
28016.66
135607.47
68370.19
31161.41
8910.47
71
71311.52
20011.95
91323.48
42996.95
24155.71
6848.84
34785.74
12304.43
148141.07
22481.31
-22.08
27871.76
9657.77
124713.26
18213.99
-19.49
33745.53
12149.69
150510.87
21595.84
-30.5
27165.39
8925.72
117367.79
18239.68
-1.46
17321.97
5498.1
79499.61
11823.87
133.84
43
15392.55
24.84
37898.7
37886.23
14902.92
-23.31
33093.6
33074.11
11246.87
15.64
32858.35
32827.85
5710.75
140.12
24090.55
24089.09
3893.12
182.71
15899.7
16043.16
18239.68
15000
10000
5000
22481.31
21595.84
18215.99
Profit After Tax
11823.87
8732.73
0
1
Interpretation:
Private bank industry profit & loss account shows that banking industry is having a
large profit yoy and growing rapidly. This is a good sign for the investor who wants
to invest in the banking industry.
Competition
Last
Price
Net Interest
Income
Net
Profit
ICICI Bank
Market Cap.
(Rs.
Cr.)
1,105.45 127,322.68
25,706.93
HDFC Bank
2,350.05 109,330.36
19,928.21
Axis Bank
1,333.45 54,744.24
15,154.81
Kotak Mahindra
IndusInd Bank
YES BANK
Federal Bank
Karur Vysya
458.00
267.00
316.25
436.05
417.00
3,255.62
3,589.36
4,041.74
3,673.23
1,757.94
4,024.98 363,399.7
1
3,926.39 222,458.5
6
3,388.49 180,647.8
7
561.11
37,436.31
577.32
35,369.52
727.13
36,382.50
464.55
43,675.61
336.03
21,993.49
33,748.71
12,418.17
10,978.53
7,454.92
4,449.13
Total
Assets
44
ING Vysya
Bank
JK Bank
353.15
4,272.65
2,694.06
318.65
33,880.24
823.50
3,992.15
3,056.88
512.38
42,546.80
45
COMPANY ANALYSIS
ICICI BANK LTD
retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI
Capital Services Limited, with ICICI Bank. The merger was approved by
shareholders of ICICI and ICICI Bank in January
2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the
High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002.
Consequent to the merger, the ICICI groups financing and banking operations,
both wholesale and retail, have been integrated in a single entity.
ICICI Bank is Indias second-largest bank with total assets of Rs.3,793.01
billion (US$ 75 billion) at March 31, 2009 and profit after tax Rs.37.58 billion
for the year ended March 31, 2009. The Bank has a network of 1,454
branches and about 4,721 ATMs in India and presence in 18 countries. ICICI
Bank offers a 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 investment
banking, life and non-life insurance, venture capital and asset management.
The Bank currently has subsidiaries in the United Kingdom, Russia and
Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri
Lanka, Qatar and Dubai International Finance Centre and representative
offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand,
Malaysia and Indonesia. Their UK subsidiary has established branches in
Belgium and Germany.
47
Company Details
Industry
Chairman
Managing Director
Company Secretary
ISIN
Bloomberg Code
Reuters Code
Bank Private
K V Kamath
Chanda D
Kochhar
Sandeep Batra
INE090A01013
ICICIBC IN
ICBK.BO
Company Address
Registered
Office
Phone
Fax
Website
Email
Landmark,Race Course
Circle,Vadodara,390007,Gujarat
91-0265-6617200/3983200
91-0265-2339926
www.icicibank.com
investor@icicibank.com
Price Information
Latest Date
Latest Price (Rs)
Previous Close (Rs)
1 Day Price Var%
1 Year Price Var%
52 Week High (Rs)
52 Week Low (Rs)
Face Value (Rs)
Industry PE
11th February,2012
1122.55
1130.10
-0.67%
22.02%
1231.00
767.00
10.00
12.71
48
20000
19000
Axis Title
18000
17000
16000
118741.77
185491.05
1148873022
0
0
451680100
39.23
1151422189
100
49
DESCRIPTION
Equity Paid
Up
Reserve
Deposits
Gross Block
Interest
Earned
Operating
Profit
PAT
Dividend %
Adj. EPS(Rs)
Adj. Book
Value(Rs)
2012
1114.81
2011
1113.21
2010
1112.6
2009
899.27
2008
889.8
50503.48
202016.6
7114.12
25706.93
48419.73
218347.83
7443.71
31092.55
45357.53
244431.05
7036
30788.34
23413.92
230510.19
6298.56
21995.59
21316.16
165083.17
5968.57
14306.13
9732.18
8925.23
7960.68
5874.41
3888.42
4024.98
120
36.1
463.02
3758.13
110
33.76
444.95
4157.73
110
37.37
417.67
3110.22
100
34.59
270.37
2540.08
85
28.55
249.56
40.95
45.11
22.91
25.24
2.14
20.29
7.53
1.16
4.82
482.44
Particulars
2012
2011
Interest
Earned
6695.96
6309.1
Q on Q Var
%
6.13
2010
Y on Y Var%
6089.57
9.96
50
Total
Expenditure
Operating
Profit
PAT
PBIDTM%
PATM%
Adj. EPS(Rs)
1717.92
1570.37
9.4
1362.39
26.1
2342.61
2211.94
5.91
2368.84
-1.11
1437.02
34.99
21.46
12.48
1236.27
35.06
19.6
10.74
16.24
-0.2
9.49
16.2
1101.06
38.9
18.08
9.88
30.51
-10.05
18.69
26.32
Dividend
25000
20000
15000
Dividend
10000
5000
0
2008
2009
2010
2011
2012
Interpretation
BETA: A measure of the volatility, or systematic risk, of a security or a
portfolio in comparison to the market as a whole. Beta is used in the capital
asset pricing model (CAPM), a model that calculates the expected return of
an asset based on its beta and expected market returns.
Here beta is more than 1 (1.4927) beta of greater than 1 indicates that the
securitys price will be more volatile than the market. Stocks beta is 1.4927;
its theoretically 49.27% more volatile than the market.
EPS: EPS indicates the profitability of a company. Earnings per Share are the
single most popular variable in dictating a shares price. Earnings per share
are the Net Income (profit) of a company divided by the number of
outstanding shares. And here EPS of the company increasing. This shows that
company is earning profit.
51
P/E: price-to-earnings ratio (P/E) is probably the most widely used and thus
misused investing metric. Its easy to calculate, which explains its popularity.
The most common way to calculate:
P/E = share price divided by earnings per share
DPS: The sum of declared dividends for every ordinary share issued.
Dividend per share (DPS) is the total dividends paid out over an entire year
(including interim dividends but not including special dividends) divided by
the number of outstanding ordinary shares issued. Dividends are a form of
profit distribution to the shareholder. Having a growing dividend per share
can be a sign that the companys management believes that the growth can
be sustained. Here dividend is highest in last 5 years; it indicates that
company is growing YOY.
ICICI is having highest market capital, net profit and assets value as compared to
competitors this indicates that ICICI is most favorable company for investors.
March201
2
March201
1
March201
0
March2009
March-2008
1114.89
0.00
1113.29
0.00
1462.68
0.00
1249.34
0.00
1239.83
0.00
50503.48
202016.60
94263.57
15501.18
48419.73
218347.82
93155.45
18264.66
45357.53
244431.05
65648.43
42895.38
23413.92
230510.19
51256.03
38228.64
21316.16
165083.17
38521.91
25227.88
SOURCES OF FUNDS:
Share Capital
Share Warrants
&
Outstanding
Total Reserves
Deposits
Borrowings
Other Liabilities
&
Provisions
Total Liabilities
APPLICATION OF
FUNDS :
Cash and balance
with Reserve Bank of
India
Balances with banks
and money at call
17536.33
29377.53
18706.88
8934.37
11359.40
12430.23
8663.60
18414.45
8105.85
52
Investments
Advances
Gross block
Less: Accumulated
Depreciation
Less: Impairment of
Assets
Net Block
Lease Adjustment
Capital
Work
in
Progress
120892.80
181205.60
7114.12
3901.43
103058.31
218310.85
7443.71
3642.09
111454.34
225616.08
7036.00
2927.11
91257.84
195865.60
6298.56
2375.14
71547.39
146163.11
5968.57
1987.85
3212.69
3801.62
4108.90
3923.42
3980.71
16489.92
12657.51
344658.11 251388.95
562959.91 395033.67
4046.56
270.37
270.37
4338.46
249.56
249.56
53
54
DESCRIPTION
March201
2
March201
1
March2010
March200
9
March2008
Interest Earned
Other Income
Total Income
II. EXPENDITURE
25706.93
7477.65
33184.58
31092.55
7603.73
38696.28
30788.34
8810.76
39599.11
21995.59
6927.87
28923.46
14306.13
4180.89
18487.02
Interest Expended
Operating Expenses
Provisions and
Contingencies
Profit Before Tax
Taxes
Total
III. PROFIT AND LOSS
17592.57
5859.83
4386.86
22725.93
7045.11
3808.26
23484.24
8154.18
2904.58
16358.50
6690.56
2226.37
9597.45
5001.15
791.81
5345.32
1320.34
29159.60
5116.97
1358.84
34938.14
5056.10
898.37
35441.38
3648.04
537.82
25813.24
3096.61
556.53
15946.94
4024.98
2809.65
3758.13
2436.32
4157.73
998.27
3110.22
293.44
2540.07
188.22
6834.63
6834.63
120.00
36.10
36.10
6194.45
6194.45
110.00
33.76
33.76
5156.00
5156.00
110.00
37.37
37.37
3403.66
3403.66
100.00
34.59
34.59
2728.30
2728.30
85.00
28.55
28.55
I. INCOME
55
56
Ratios
2012
2011
2010
2009
2008
Per Share
Ratios
EPS
36.10
33.76
37.37
34.59
28.55
DPS
12
11
11
10
8.50
Profitability
ratios
GP Ratio
15.06
12.36
12.99
11.41
15.10
NP Ratio
12.17
9.74
10.51
10.81
14.12
ROE
7.96
7.83
11.75
13.37
14.62
ROA
1.08
0.96
1.12
1.04
1.21
Liquidity
Ratios
Current Ratio 1.94
0.78
0.72
0.61
0.62
Quick Ratio
5.94
6.42
6.04
6.64
14.70
EPS
40
35
30
25
20
EPS
15
10
5
0
2008
2009
2010
2011
2012
Interpretation
Earnings per share (EPS):
57
DPS
14
12
10
8
6
DPS
4
2
0
2008
2009
2010
2011
2012
Sometimes the equity shareholders may not be interested in the EPS but in
the return which they are actually receiving from the firm in the form of
dividends. The amount of profits distributed to shareholders per share is
known as DPS and it is calculated by dividing total profits distributed by
number of equity share.
Dividend per share over the years has increased which indicates that the amount
of dividend distributed towards the shareholder has increased.
58
GP ratio
16
14
12
10
8
GP ratio
6
4
2
0
2008
2009
2010
2011
2012
NP
16
14
12
10
8
NP
6
4
2
0
2008
2009
2010
2011
2012
59
The NP ratio establishes the relationship between the net profit (after tax) of
the firm and the net sales. Its measures the efficiency of the management in
generating additional revenue over and above the total cost of operations.
Net profit ratio has decreased over the years which mean that the overall
profitability of the firm has fallen down.
ROE
16
14
12
10
8
ROE
6
4
2
0
2008
2009
2010
2011
2012
60
ROA
1.4
1.2
1
0.8
0.6
ROA
0.4
0.2
0
2008
2009
2010
2011
2012
Current Ratio
2.5
2
1.5
Current Ratio
1
0.5
0
2008
2009
2010
2011
2012
Current Ratio: Current ratio shows the firms ability to pay its current
liability out of its current assets. Generally a current ratio of 2:1 is considered
to be satisfactory but sometimes it varies from industry to industry therefore
the firms current ratio should be compared with the standard for the specific
industry only.
Current ratio of the firm has increased over the year which indicates that the firm
has enough current assets to pay off its current liability.
61
Quick ratio
16
14
12
10
8
Quick ratio
6
4
2
0
2008
2009
2010
2011
2012
Quick ratio: This ratio establishes the relationship between quick current
assets and current liabilities. Quick current assets excludes inventory and
prepaid expenses from current assets as they are potentially illiquid. This
calculated by dividing quick assets by total current liabilities. Generally a
quick ratio of 1:1 is considered to be satisfactory.
Quick ratio of the firm is much higher than the ideal and its increasing over the
years which means that the firm has enough quick assets to pay off its current
liability.
Adjusted PE (x)
PCE(x)
Price /
Book
Value(x)
Dividend
Yield
(%)
EV/Net Sales(x)
EV/EBITDA(x)
EV/EBIT(x)
EV/CE(x)
March201
2
26.39
25.59
2.06
March201
1
9.85
8.76
0.75
March201
0
20.61
18.81
1.84
March200
9
24.67
22.13
3.16
March200
8
20.64
18.16
2.36
1.26
3.31
1.43
1.17
1.44
7.80
20.60
8.74
0.55
4.19
14.59
4.68
0.34
4.93
19.05
5.31
0.38
5.83
21.84
6.41
0.37
6.38
23.48
7.19
0.36
62
M Cap / Sales
High PE
Low PE
4.13
28.45
10.35
1.19
25.19
7.03
2.78
42.13
20.61
3.49
29.50
15.96
3.66
22.76
13.24
DESCRIPTION
16.77
-127.46
-104.54
256.45
52.29
Price to Cash
Flow Ratio
56.82
-2.61
-7.37
3.33
11.27
Free
Cash 102.15
Flow
per
Share
Price to Free
9.33
Cash Flow
241.13
198.79
-160.91
30.12
1.38
3.87
-5.30
19.56
Free Cash
Flow
Yield
Sales to cash
flow ratios
0.11
0.72
0.26
-0.19
0.05
13.75
-2.19
-2.65
0.95
3.07
Year
2008
2009
2010
2011
2012
EPS
36.10
33.76
37.37
34.59
28.55
P/E
26.39
9.85
20.61
24.67
20.64
63
compounding
of
the
EPS
is
4) Now, based on the past 5 year P/E take the average of P/E value which is
20.432
5) Now multiply the step 3 & 4 and we will get the estimated share price.
6) Estimated share price is 921.176 and current share price is 1033 which
is higher than the estimated its means that share price is overvalued
and investor should sell the shares for short term.
March 31 ,2011, much above the RBI regulation of 70%. Operating expenses
rose by 14.1% to INR 17.89 in Q4FY12 from INR 14.58 Bn in Q4FY11. Credit
to deposit ratio from domestic business stood at 75%, Cost to income ratio
was 42% due to healthy operating income growth. This was on account of
expanding network of the bank with 2529 branches and 6104 ATMs. ICICI
Banks growth in the past has been mainly retail-driven, the bank is now
looking to grow its large corporate and SME segment loan book as well.
Progress on the 4C strategy (CASA, capital conservation, cost control and
credit charges) has been good. At the CMP ICICI is trading at 2x of its FY12E
P/BV (standalone basis). We have Accumulate rating on the stock for a target
price of INR 1306, says Unicon Investment research report.
65
FINDINGS
In this project report there are many facts which say whether an investor
should invest in ICICI Bank or not. For the conclusion on this part, we have
analyzed economic, industry as well as company (ICICI Bank).
1) In the Economic Analysis we can see that economic is booming after 2010
and current position shows that this is the good time to invest after the
recession because GDP growth rate is increasing. And overall economy is
growing.
2) In the industry analysis here overall industry PAT is increasing over the years
which means banking industry is having much profit but on the other side
banking industry Net Profit growth has decreased very much so investor
should invest carefully.
3) In the analysis of ICICI Bank we can see that EPS is increasing yoy. And
dividend is also increasing so investor can invest in the company but on other
side we companys intrinsic value is less than the current price it shows that
the share price is overvalued and invester should sell the share. But if
investor want to invest in the company for long term than he can have a
good profit because company growing rapidly in terms of profit and net sales
and its EPS & DPS are increasing over the years.
66
LIMITATIONS
Fundamental analysis has some limitation involved in it. This limitation can be
explained as under:
Time Constrain:
Fundamental analysis may offer excellent insights, but it can be
extraordinarily timeconsuming. Time-consuming models often produce
valuations that are contradictory to the current price prevailing on the
exchange.
Company Specific:
Valuation techniques vary depending on the industry group and specifics of
each company. For this reason, a different technique and model is required
for different industries and different companies. This can be quite timeconsuming process, which can limit the amount of research that can be
performed.
The sales and inventory ratio may be very important for the cement sector
company but these ratios are not very useful for the banking sector.
Inadequacies of Data:
While making analysis one has to often wrestle with inadequate data. While
deliberate falsification of data may be rare, subtle misrepresentation and
concealment are common.
Future Uncertainties:
Future changes are largely unpredictable; more so when the economic and
business environment is buffeted by frequent winds of change. In an
environment characterized by discontinuities, the past record is a poor guide
to future performance.
Irrational Market Behavior:
67
The market itself presents a major obstacle while making analysis on account
of neglect or prejudice, undervaluation may persist for extended periods;
likewise, overvaluations arising from unsatisfied optimism and misplaced
enthusiasm may endure for unreasonable lengths of time
CONCLUSION
Fundamental analysis holds that no investment decision should be without
processing and analyzing all relevant information. Its strength lies in the fact
that the information analyzed is real as opposed to hunches or assumptions.
On the other hand, while fundamental analysis deals with tangible facts, it
does not tend to ignore the fact that human beings do not always act
rationally. Market prices do sometimes deviate from fundamentals. Prices rise
or fall due to insider trading, speculation, rumor, and a host of other factors.
Fundamental analysis is based on the analysis of the economic, industry as
well as the company and in this research we can see that the economic
indicators have an effect on the bank growth and assets. The above report
says that our economic is growing after the recession and it is the good time
for the one who want to invest. And according to the industry analysis
investor can invest in the banks but he/she should be careful for the
investment. But according to financial analysis of ICICI bank its performance
in the private industry is good and expected to grow further in the near
future which is a good sign for investment. EPS and dividend both are
increasing yoy and its on the top in terms of profit and net interest income if
we compared it with the other banks in the same industry but we cant ignore
the intrinsic value of the company which is lower than the current value
which shows then investor should sell the share of the company if he/she is
investing for short term and for long term it is good for investor to invest in
the company.
68
SUGGESTIONS
The analysis carried out at on the ICICI Bank, their profit and loss account,
balance sheet and ratios. I shall suggest the investors to invest in ICICI Bank
than the other banks as a value investment.
Reasons:
Largest private sector bank in India, second largest in entire banking
Industry
Strong increase in profit year-on-year basis.
Increasing EPS indicate good earnings.
Increase in sharing profit with shareholders in form of dividend.
ICICI Bank is expanding its footholds on international level also; its Insurance
and asset management business are also performing well.
69
BIBLIOGRAPHY
Books:
Investment Analysis & Portfolio Management- Prasanna Chandra.
Financial management R.P Rustagi
70