Security Analysis and Portfolio Management of Five Major Players in Banking Sector
Security Analysis and Portfolio Management of Five Major Players in Banking Sector
Security Analysis and Portfolio Management of Five Major Players in Banking Sector
CERTIFICATE
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[2]
DECLARATION
I hereby declare that this project report titled Security analysis and Portfolio
Management of Five major players in Banking Sector is the original work
done by me under the guidance of BIJU M.K, faculty, MES College of
Engineering, Kuttipuram and submitted to the Calicut University in the partial
fulfilment of the requirement of the Master of Business administration degree.
I further declare that this report has not been submitted earlier either to this
institution or any other institution for the fulfilment of the requirement for any
course of studies. I also declare that no chapter of this manuscript in whole or
in part is lifted and incorporated in this report from any earlier work done by
others or me.
Date:
Place: Kuttipuram
Azhar
K.P
[3]
ACKNOWLEDGEMENT
Behind every successful effort, there lies a contribution from numerous sources
irrespective of their magnitude. My project is no exception and I take this opportunity to
express my sincere thanks to those helping hands wholeheartedly.
First and foremost I thank God for his almighty support and mercy drop of blessings upon
me to complete my project successfully.
The satisfaction that accompanying the successful completion of the task would be
incomplete without mentioning the people who made it possible with the constant guidance
and encouragement all through the period of study.
I am indebted to my Project Guide Mr. Biju M.K (Faculty Guide), and all other faculties
and staff members of Department Of Management science for their valuable suggestions
and sincere co-operation rendered to me during the academic period.
I am profoundly thankful to Shri. Thomas George M.A GDIM (UK) PhD (External
Guide), Cochin Stock Exchange who was generous with time and effort to explain the
theoretical and practical aspects of Security Analysis and Portfolio Management.
I wish to pay my gratitude to my parents without whose support and inspiration, this
project would have remained a dream. Last but not least; I take this opportunity to thank all
my friends and others who have helped me directly or indirectly for the successful
completion of the project.
AZHAR K.P
[4]
TABLE OF CONTENTS
SERIAL
NO
LIST OF CONTENTS
PAGE NO
List of Tables
List of Charts
1
Chapter I INTRODUCTION
Introduction to Study
2-3
3-4
22-27
28-31
32-43
104-110
111-112
Chapter IX Annexure
113-123
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6-21
44-103
EXECUTIVE SUMMARY
This study was carried out at Cochin Stock Exchange during the month
of May 2010. The report is an outcome of a study undertaken in CSE on the
topic Security Analysis and Portfolio Management of five major players in
Banking Sector.
Out of the ten companies, which were taken on the basis of market
capitalization from the BSE list and ranked accordingly, five were selected to
conduct a detail study. The banks selected for the study are State Bank of
India, ICICI Bank, Punjab National Bank, AXIS Bank and HDFC Bank.
Indian banking companies is analyzed by taking up fundamental
analysis and technical analysis along with creating different mix of portfolio
within the selected securities. Fundamental analysis involves finding the
intrinsic value of the selected banking shares. It is also done to indentify the
misprice share there by assisting the prospective investor in making the buy or
sell decision.
Technical analysis was conducted to find the movement of stock price
over the period of time. Mathematical indicators used for Technical Analysis
are Exponential Moving Average, ROC and MACD.
It is rare to find investor investing their entire savings in a single
security. Instead, they tend to invest in a group of securities called portfolio.
Creation of portfolio helps to reduce risk without sacrificing returns. Portfolio
was constructed on the basis of Equal Weight, PE Ratio and Market
Capitalization. To find the optimal Portfolio Sharpe and Treynor Ratio were
used to evaluate the Portfolio.
Department of Management Science
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All the data collected are secondary. The data were absorbed from
websites, magazines and books. For conducting Fundamental Analysis five
years data were taken. Technical analysis was conducted with eighteen
months of data. Portfolio was constructed on the basis of five years of data.
Fundamental Analysis revealed that all the banks have shown
consistently good performance and the performance is improving every year.
Therefore the performances of all these banks are likely to be much better in
the years to come. After analysing the Mathematical indicators it was found
that most of the companies are in bullish trend. After evaluating the three
portfolios which were constructed with the different proportions of the five
selected securities and measuring performance based on Sharpe and Treynor
Ratios, it has been found that, the portfolio based on P/E Ratio ranks highest.
From the overall study it is found that Banking Industry is booming in
India and it is the best time to invest in banking industry. It is viable for
investors to invest in the sector on a long term basis.
[7]
CHAPTER I
INTRODUCTION
[8]
[9]
value of the selected banking shares. It is also done to indentify the misprice share there by
assisting the prospective investor in making the buy or sell decision.
It is rare to find investor investing their entire savings in a single security. Instead,
they tend to invest in a group of securities called portfolio. Creation of portfolio helps to
reduce risk without sacrificing returns. The risk and return characteristics of portfolio differ
from those of individual securities combining to form a portfolio.
The project also examines the performance of various portfolio based on (1) Equal
Weight (2) P/E Ratio (3) Market Capitalization along with the performance evaluation by
Sharpe and Treynor Ratio.
Out of the ten companies, which were taken on the basis of market capitalization
from the BSE list and ranked accordingly, five were selected to conduct a detail study.
Thus the study is limited to five selected banking companies in India, they are;
ICICI BANK
HDFC BANK
AXIS BANK
PUNJAB NATIONAL BANK
[10]
To construct analyse, select and evaluate a portfolio consisting of five major selected
players in the Banking Industry.
To compute the intrinsic value of selected securities from Banking industry using
fundamental analysis and recommend for buy or sell option
The scope of the study is limited to five selected banking companies in India. Investor
will be able to take right decision in case of investment which is already made in the
scrip of banking companies whether it is wise to hold on or to sell the shares.
The study helps the CSE in making assumptions regarding the performance of banking
industry in the stock market
The project will be helpful for other researchers and scholars in having a detailed study
regarding the performance of banking industry.
[11]
LIMITATIONS
The study was conducted only for a short period of 45 days.
Data collected were from secondary sources.
The effect of speculation, which has a direct bearing on security price is not considered.
The fundamental analysis considered the quantitative effects of company factors only,
even though the economy and industry factors significantly affect the share prices of the
shares.
The securities market, being a highly volatile one, the advice on investment options
based on this study is subject to changes.
Technical analysis was carried out using only the past eighteen months data.
Only five securities are used in the portfolio construction
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CHAPTER II
INDUSTRY PROFILE
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2.
3.
be divided into:
1.
Primary market
2.
Secondary Market
SECONDARY MARKET
Secondary Market refers to a market where securities are traded after being
initially offered to the public in the primary market and / or listed on the stock Exchange.
Majority of the trading is done in the secondary market. Secondary market comprises of
equity markets and the debt markets.
[14]
STOCK EXCHANGE
Stock Exchange is an organized marketplace where securities are traded. These
securities are by the government, semi-government Bodies, Public sector undertakings and
companies for borrowing funds and raising resources. Securities are defined as monetary
claims and include stock, shares, debentures, bonds etc. If these securities are marketable
as in the case of Government stock, they are transferable by endorsement and are like
movable property. Under the securities Contract Regulation Act of 1956, securities trading
are regulated by the Central Government and such trading can take place only in Stock
Exchange recognized by the Government under this Act. At present there are 23 recognized
stock Exchanges in India. Of these major Stock Exchange, like Mumbai, Calcutta, Delhi,
Chennai, Hyderabad, Bangalore etc. are permanently recognized while a few are
temporarily recognized.
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(b) Participants.
Recognized members of NSE are called trading members who trade on behalf of
themselves and their clients. Participants include trading members and large players like
banks who take direct settlement responsibility.
Trading at NSE takes place through a fully automated screen based trading
mechanism, which adopts the principle of an order driven market. Trading members can
stay at their offices and execute the trading, since they are linked through a communication
network. The prices at which the buyer and seller are willing to transact will appear on the
screen. When the prices match the transaction will be completed and a confirmation slip
will be printed at the office of the trading member.
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Any equity holding at least one lakh debentures of particular scrip can offer them
for trading on the OTC.
BANKING IN INDIA
Banking in India originated in the last decades of the 18th century. The oldest bank
in existence in India is the State Bank of India, a government-owned bank that traces its
origins back to June 1806 and that is the largest commercial bank in the country. Central
Department of Management Science
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banking is the responsibility of the Reserve Bank of India, which in 1935 formally took
over these responsibilities from the then Imperial Bank of India, relegating it to commercial
banking functions. After India's independence in 1947, the Reserve Bank was nationalized
and given broader powers. In 1969 the government nationalized the 14 largest commercial
banks; the government nationalized the six next largest in 1980.
Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector
banks (that is with the Government of India holding a stake), 31 private banks (these do not
have government stake; they may be publicly listed and traded on stock exchanges) and 38
foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs.
According to a report by ICRA Limited, a rating agency, the public sector banks hold over
75 percent of total assets of the banking industry, with the private and foreign banks
holding 18.2% and 6.5% respectively.
Currently (2007), banking in India is generally fairly mature in terms of supply, product
range and reach-even though reach in rural India still remains a challenge for the private
sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks
are considered to have clean, strong and transparent balance sheets relative to other banks
in comparable economies in its region. The Reserve Bank of India is an autonomous body,
with minimal pressure from the government. The stated policy of the Bank on the Indian
Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been
true.
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CHART No.1
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The bank also concentrate in agriculture, for that it took initiative spotlight kharif
and spotlight rabi campaigns for higher disbursement. It introduced Automated Teller
Machine with Kishan Credit Cards in all circles to assist agriculture peoples, cumulatively
the bank has credit linked 7.68 Lac. Self Help Groups and disbursed loans to the extent of
Rs 3,468 Crs. so far. In the year 2001 the SBI Life was started. SBI is the only Bank to
have been permitted a 74% stake in the insurance business. The Bank's insurance
subsidiary "SBI Life Insurance Company" is a joint venture with Cardif S.A holds 26%
stake. SBI Life enjoys the unique distinction of being the first private sector life insurance
company in India to make profits for two consecutive years.
During the year 2004-05 SBI was the only one bank in India to ranked among top
100 banks in the world and also among the top 20 banks in Asia in the annual survey by
"The Banker" as well as in the same year bank received two prestigious awards for
technology from the same The Banker magazine. In the year 2005-06 the bank introduced
"SBI e-tax" an online tax payments facility for direct and indirect tax payment, the
centralized pension processing center also launched during the year. SBI made a
partnership with Tata Consultancy Services for setup C-Edg Technologies and consulting
services to the banking, financial services and insurance industry. The bank noted as The
most preferred bank in a survey by TV 18 in association with AC Nielsen-ORG Marg
along with SBI voted as The most preferred housing loan provider in AWAAZ consumer
awards for 2006. In the customer loyalty survey 2006-07 conducted by "Business World",
SBI has been ranked number One in all parameters of customer satisfication, service
orientation, customer care/ call center, customer loyalty and home loans. SBI Funds
(SBIFMPL) was judged "Mutual fund of the year" by CNBC/TV-18/CRISL. SBI FMBL
Equity schemes won 11 awards and ranging of the AMC in terms of Assets under
management remained at 7th position during the year 2006-07. SBI cards is in 2nd position
in the country under market share. During the year 2006-07 14.81 lac additional cards were
issued by SBI and they crossed the landmark of 3 million cards totally.
The strategic initiatives that SBI have launched business groups in 2007 namely
rural and agri business; treasury and marketing; corporate strategy and new business; and
fourth mid corporate group is on the anvil. They also introduced new products and services
Department of Management Science
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international level such as UK, Canada and Russia. To efficiently distribute its products
and services, the bank has developed multiple access channels comprising lean brick and
mortar branches, ATMs, call centers and Internet banking. The Bank has introduced the
concept of mobile ATMs in the remote/rural areas. It has also extended its mobile banking
services to all cellular service providers across India and NRI customers in USA, UK,
Middle-East and Singapore.
The merger and acquisition are the key kind to bank. The Bank of Madura (BOM)
got merged with ICICI Bank during the period 2000-01 and in 2001 ICICI (Financial
Institution) merged with ICICI Bank. The two subsidiaries of ICICI Ltd viz ICICI Personal
Financial Services and ICICI Capital Services were also merged with the ICICI Bank on
March 2002. During May,2003 the bank has acquired Transamerica Apple Distribution
Finance Private Ltd and renamed it to ICICI Distribution Finance Private Limited which is
primarily engaged in financing in the two-wheeler segment.
Bank received many awards and recognitions during the year 2005-06. Some of
them are Best Bank in India by Euro money, Best Integrated Consumer Bank Site in Asia
by Global Finance, Best Cash Management-Country Awards in India by The Asset and
Best Secondary Offering by Finance Asia. ICICI Bank noted as Bank of the year 2006
India by The Banker, it was a award to ICICI Bank at second time from last year. During
the year 2006-07 also Bank acquired the number of awards. Samples are, Best Transaction
Bank in India by Asset Triple AAA, Best Bank of the Year 2006 by Business India,
National Award for Excellence in Energy Management by CII and Excellence in Multi
Channel Distribution by Asian Banker.
As on April 2007 Sangli Bank Ltd was merged with ICICI Bank Ltd. In the
Wholesale Banking segment, the bank has achieved a significant milestone in the market
making activity by expanding the product suite to include foreign exchange options. As on
May 2007 the bank have market capitalization of Rs 77,834 crore. In 2007 June ICICI
Bank has entered into an agreement with networking solutions provider GTL Ltd to lease
out its call centre facility at Mayhap worth of around Rs 100 crore for a period of 25 years.
In August of 2007 the bank has availed of a $200-million worth Line of Credit (LoC) from
The Export-Import Bank of Korea (Korea Exim bank) for the purpose of the Hong Kong
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branch of ICICI Bank gets funds from Korea Exim bank, and the bank lends foreign
currency loans to domestic companies investing in Korea and the bank had taken a similar
LoC of $200 million from the Japan Bank for International Cooperation (JBIC) last year. In
2008 ICICI Bank, come a cropper in the global stage when it comes to their brand value,
which is $2,603 million, it reveals by the study of London-based consultancy Brand
Finance.
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of ADS and bank had alliance with LIC for provide online payment of insurance premium
to the customers.
Bank received plenty of awards to its credit, in the year 2003 bank received "Best
Local Bank in India" by Finance Asia, "Best Domestic Bank in India Region" in The Asset
Triple A Country Awards 2003. Apart from this, 'Best Bank in the Private Sector' for the
year 2003 in the Outlook Express Awards, 'Best New Private Sector Bank 2003' by the
Financial Express in the FE-Ernst & Young Best Bank's survey 2003. It was also figured in
the 'Best Under a Billion, 200 Best Small Companies for 2003' by Forbes Global and for
use of information technology the bank was awarded with 'Best IT user in Banking' at the
IT User Awards 2003 conferred by Economictimes.com & Nasscom. In the year of 2004 to
2005, "Best Domestic Commercial Bank" & "Best Cash Management Bank"- India- Asia
money Awards for Corporate Excellence of 2004-05, "Best Bank" - India - Finance Asia,
"Company of the Year "- The Economic Times Awards for Corporate Excellence 2004-05,
"Best Domestic Bank in India" - The Asset Triple A Country Awards 2005, "Most
Customer Responsive Company- Banking and Financial Services" - The Economic Times Avaya Global Connect Customer Responsiveness Awards 2005. During the year of 200607 also bank received number of awards, The Asian Banker Achievement Award, Best
Listed Bank of India in 2006 by Business World, Euro money Award as Best Bank in
India, One of Asia Pacific's Best 50 Companies in 2006 by Forbes Magazine, Asia money
Award for Best Local Cash Management in Large and Medium segments, other than above
bank received " Best Bank in India " award continuously from the year 2003 to 2007
conferred by the magazine Business Today. The Financial Express rated 1st in India's Best
Banks 2007 under New Private Sector Bank under along with Axis Bank.
As on 2007 May, The Reserve Bank of India has allowed HDFC Bank to start a non
banking finance company. The NBFC, to be set up by HDFC Bank as a wholly owned
subsidiary and will undertake retail operations such as auto, personal loans etc.. As part and
apart from the regular banking activity, HDFC Bank and The Institute for Technology and
Management (ITM), Chennai gone under Memorandum of Understanding to promote cooperation advancement of academic and business exchanges between the two.
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innovative solutions. In the year of 2007 the bank again raised $218.67 million through
Global Depository Receipts. The bank has rated 1st rank under new private sector banks in
India's Best Banks for the year 2007 by The Financial Express magazine (The Express
Group).
In 2007, the bank has opened 153 new branches. This includes 43 extension
counters that have been upgraded to branches and the setting up of 8 Service
branches/CPCs. The Bank has opened four new overseas offices, with branches at
Singapore, Dubai and Hong Kong and a representative office in Shanghai and has signed
an agreement with the Luxembourg-based bank Banque Privee Edmond de Rothschild
Europe provide wealth management solutions to overseas Indians. 450 ATMs are opened
during the year of 2007. The total network of the bank as on April 2008, a customer base of
90 lakh, 655 branches in more than 407 cities and towns, 20 extension counters and 2778
ATMs across the
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National Bank and Hongkong & Shanghai Banking Corporation (HSBC) was launched in
New Delhi in November of the year 2000. The scheme offers international quality gold for
sale to the Bank's clientele consisting of exporters and others at competitive prices. PNB
came out with its first Initial public offer (IPO) in March 2002 for 5,30,60,700 equity
shares of Rs 10 each. During the year 2002, the bank started its branch in M.G. Road,
Bangalore named as Mid-Corporate Branch (MCD) to provide its corporate clients with a
credit limit of Rs 3.5 crore and above. PNB made joint venture with Infosys for the
implementation of a Centralized Banking Solution for it. The Bank received the Best Bank
Award' for excellence in banking technology. PNB tied up with Cisco Systems for
networking 3,870 branches as part of its Rs 150 crore plan.
PNB has taken over Kozhikode-based Nedungadi Bank Ltd (NBL) in February of
the year 2003. The Bank has entered into an alliance with New India Assurance for selling
its general insurance products in the same year 2003. In June of the year 2003, PNB made
Memorandum of Understanding (MoU) with Principal Financial Services Inc. (USA) and
Vijaya Bank for joint venture partnership in Life Insurance, Pensions and Asset
Managements (MF) business. The Bank has formed a strategic alliance with Infrastructure
Leasing and Financial Services Ltd (IL&FS) to set up a private equity fund for investing in
domestic companies. Entered an agreement with Oriental Bank of Commerce, Indian Bank,
UTI Bank and Global Trust Bank for sharing ATMs spread across the country. In the year
2004, PNB acquired the assets of Hindustan Transmission Product Limited (HTPL) under
Sarfaesi. The Bank had signed a corporate agency agreement with Export Credit Guarantee
Corporation of India Ltd (ECGC) for marketing ECGC's export credit insurance products
through the network of the bank's branches. A MoU was signed for the deployment of
various IT-related solutions between the bank and Intel. PNB and ICICI Bank had signed a
MoU for ATM network sharing. PNB implements Loans and Advances Data Desk for
Evaluations and Reports, (LADDER) system for rationalization of returns, asset
classification and provisioning, credit monitoring and NPA management.
The Bank has mandated the project worth of Rs 5-10 crore to Tata Consultancy
Services (TCS) for implement human capital management and payroll solution in the year
2004. The Bank branch at Kabul, Afghanistan has commenced soft opening on July 26th of
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2004. PNB has launched its corporate Internet banking facility during November of the
year 2004. PNB has coveted as Best IT User in Banking & Financial Services Industry 2004 - by NASSCOM in partnership with Economic Times. The Bank had unveiled ATM
at Edappal in the year of 2005. PNB had adjudged with Golden Peacock Award - for
Excellence in Corporate Governance - 2005 by Institute of Directors. During 2005-06, the
bank revamped its organizational structure. Seven new Zonal Offices were created. The
Bank received 'Best IT Team of the Year Award' - at the IDRBT Banking Technology
awards for the year 2005-06.
During the year 2006, PNB had tied up with MasterCard International to launch a
signature-based debit card and opened one new branch in Uttaranchal. Also during the
same year of 2006, the bank has made tie up with Indian Airlines for online booking of air
tickets and ties up with IDBI Capital. PNB had entered into MoU with India Infrastructure
Finance Company (IIFC) in October of the year 2007 with an aim to extend its cooperation
and support to IIFC in areas of creating a deal flow of infrastructure projects. RBI rejected
Punjab National Bank's proposal to float a credit card joint venture with insurer American
International Group Inc. (AIG) and Venture InfoTech Global Pvt. Ltd, a third-party
processor for credit card companies.
PNB aims to expand its base in the entire northern India region for providing
banking facilities at the doorsteps of the peoples. The Bank is serving over 3.5 crores
customers through 4540 Offices including 421 extension counters - largest amongst
Nationalized Banks. PNB is moving with the vision, to be India's most profitable Universal
Bank. Also wants to profitably serve the banking and the financial services needs of the
nation everyday and everywhere.
[28]
CHAPTER III
COMPANY PROFILE
[29]
initiatives including initiating trading in dematerialized shares. This has effected in the
purpose of bad deliveries coming down.
CSE introduced the facility of computerized trading called" Cochin Online Trading.
(COLT) on March 17, 1997. CSE also became a member with an objective of consolidating
the small, fragmented and less liquid markets into a national legal integrated liquid market.
With the enforcement of efficient margin system and surveillance CSE has successfully
prevented major defaults. Introduction of Fast Track System made CSE the stock exchange
with shortest settlement cycle in the country. The Cochin Stock Exchange (CSE) has been
playing a very vital role in the economic development of the country in general and Kerala
in particular.
Right from the beginning CSE has been striving hard so as to achieve the following
goals:
Providing investors with high level of liquidity where by the cost and time involved
in the entry and exit from the market becomes the least.
Bring in high tech solutions and make possible absolute transparency of all
operations.
ORGANISATIONAL STRUCTURE
Chart No.2
ORGANIZATIONAL STRUCTURE
BOARD OF DIRECTORS
EXECUTIVE DIRECTOR
Legal
Systems
[30]
Members
Listing
Settlem
DEPARTMENTAL PROFILE
LEGAL DEPARTMENT
CSE has a full-fledged Legal Department, headed by Manager-Legal and is primarily
engaged in advising the management in the merits and demerits of legal issues involving the
exchange.
A major function undertaken by the department is to ensure that the various rules,
regulations and directives of SEBI with regard to trading in the Capital Market by brokers and
sub-brokers, are brought to the notice to members and the investing public. Manager-Legal is
the compliance officer as per the provisions of SEBI regulations and ensures strict compliance
of SEBI directives and guidelines.
Manager-Legal also functions as secretary to the board of directors. The three
important areas being looked after by the legal department are:
(a) Investor Grievance Service
(b) Arbitration
(c) Default
SYSTEM DEPARTMENT
It is the heart of the various operations of CSE. The department provides the
necessary technical supports for screen based trading and the computerized functioning of
all other departments.
Department of Management Science
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The major back office system soft wares used are NESS and BOSS for NSE and
BSE trades calculations respectively. These soft wares are developed in-house by CSE.
These soft wares are used to maintain the entire records of all the trades that occur each day.
It also does all the required calculations for deductions and also creates all kinds of reports
needed by the brokers and their clients.
SETTLEMENT DEPARTMENT
Settlement department is a key department of the CSE. It is dealing with cash and
securities. It helps the broker in setting the matters related to their pay-in and payout,
recovery of dues and settling the matters related to the bad deliveries. This department is
headed by a Deputy Manager and assisted by two senior officers who look into the
operations involved in the settlement activities in CSE. CSE is following T+2 settlement
system (where T- dates of transaction).
SURVEIALLANCE DEPARTMENT
The Exchange has set up Surveillance Department to keep close watch on price
movements of scrip, detect market abuses like price rigging, monitor abnormal prices and
volumes which are not consistent with normal trading pattern etc. The main objectives of
the department are to provide a free and fair market, to arrest unsystematic risk from
entering into the system and to manage risks. The surveillance function at the exchange has
assumed greater importance in the last few years. SEBI has directed the stock exchanges to
setup a separate surveillance department with staff exclusively assigned for this function.
It also offers services like:
Department of Management Science
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ADMINISTRATION DEPARTMENT
A legal officer with two Deputy Managers for administration and compliance and
management information system heads the department. Two senior officers looking after
public relations and administration form part of administration.
The major activities of this department include: Organizing council meeting, annual general meeting, extra
ordinary general
Fund Management
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CHAPTER IV
LITERATURE REVIEW
LITERATURE RIVIEW
As per the study of P Janaki Rao and S Durga Rao Investment decisions, in all
sectors, have been gaining paramount importance, warranting the investors to be
continuously cautious of risk and return involved in the same. The faculty investment
analysis calls for planned and meaningful appraisal of both internal and external factors
affecting the returns. Ever since Indian economy opened its doors to MNCs, the Indian
banking sector has been witnessing bizarre changes in terms of new products and services
and stiff competition as well. The sort of IPOs that have been taking place in banking
sector are amazing. In the light of these recent developments, a careful analysis of the
profitability of Indian banking sector is inevitable. The present study attempts to analyze
the profitability of the three major banks in India: SBI, ICICI, and HDFC. The variables
taken for the study are Operating Profit Margin (OPM), Net Profit Margin (NPM), Return
Department of Management Science
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on Equity (RoE), Earnings per Share (EPS), Price Earnings Ratio (PER), Dividends per
Share (DPS), and Dividends Payout Ratio (DPR). The study brings out the comparative
efficiency of SBI, ICICI, and HDFC.
As per the study of Prof VR Ganesh in his article Analysis Of Banking Industries
he explains, the banking industry is and always has been one of the most important aspects
of all industries. The reason being, every other industry needs banks to take part in any
investments or financial movements as a way to better their position in their industries.
We will look at how and why the banking industry has been able to hold this position for so
long through the Competitive Landscape, Porters Five Forces Analysis, Major Segments
of the Industry, the Industry Life cycle, and The PESTEL Factors. These tools will help
provide data and a thorough analysis of the performance in the banking industry. Within
the banking industry there are a lot of competitors which offer the same services but for
some reason some are doing better than others. A Strategic Group Analysis has been done
to show the comparison between top competitors.
As per the study of Sree Ram G Banking Sector in India is one of the growing
sectors with great dynamics. There are various factors which affect the share prices of
Banking Companies. This report is all about how various factors (Internal and External)
affect the Banking Sector Share Prices. In this report a detailed analysis of the factors
affecting the share prices is carried on and a model is developed to study the effect of
various factors on the share prices. Here, various internal factors (Banks Profitability,
Income, Expenses, and News about the Bank.) and external factors (Government policies,
CRR, Repo Rate, Reverse Repo Rate, Rules and Regulations.) are considered which affect
the prices of the shares of Bank. Datas are collected for all the quantifiable factors and for
the rest factors a theoretical explanation is given in detail. Using SPSS a model is
developed which shows the regression and correlation co-efficient between the share prices
and various factors affecting the same.
According to Daniel Giamodiurs and Laonnis D Vrontos in their article studies
the impact of modeling time-varying covariances/correlations of hedge fund returns in
terms of hedge fund portfolio construction and risk measurement. We use a variety of static
and dynamic covariance/correlation prediction models and compare the optimized
Department of Management Science
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THEORETICAL PERSPECTIVE
SECURITY ANALYSIS
Securities analysis refers to the analysis of trading securities from the point of view
of their prices, returns and risks. All investments are risky and the expected return is related
to their risk. Their analysis will help in understanding the behavior of security prices and
the market in decision-making for investment. If it is an analysis of only one scrip, it is
called microanalysis of a company. If it is an analysis of market of securities, it is referred
to as a macro picture of the behavior of the market.
It is mainly out in two approaches namely: Fundamental analysis and Technical
analysis. Under fundamental analysis the share value depends on the intrinsic worth of the
share. It is basically an economy industry-company analysis. It considers the external as
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well as the internal factors that determine a companys efficient functioning. In technical
analysis the price moves in a predictable manner and in waves and trends. The present
prices are the result of past trends and can accordingly be predicted. Thus securities
analysis forms the first step towards devising an efficient portfolio of securities
FUNDAMENTAL ANALYSIS
Fundamental Analysis is really a logical and a systematic approach to estimating
the future dividends and share price. It is based on the economic premise that shares price
is determined by a number of fundamental factors relating to the economy, industry and
company. Hence, the economy fundamentals, industry fundamentals and company
fundamentals have to be considered while analyzing a security for investment purpose
Each of the shares is assumed to have an economic worth based on its present and
future earning capacity. This is called its intrinsic value or fundamental value. The purpose
of fundamental analysis is to evaluate the present and future earning capacity of the share
based on the economy, industry and company fundamentals and there by assess the
intrinsic value of the share with the prevailing market price to arrive at an investment
decision. If the market price of the share is lower than the intrinsic value, as the investor is
decide to buy the share as it is under priced. The price of such share is expected to move up
in future to match with its intrinsic value.
On the contrary, when the market price of the share is higher than its intrinsic
value, it is perceived to be over priced the market price of such share is expected to come
down in the future and hence the investor would decide to sell such a share. Fundamental
Analysis thus provides an analytical frame work for investment decision making. This
analytical frame work is known as E-I-C framework (Economy-Industry-Company
Analysis).
The fundamental Analysis insists that no one should purchase or sell a share on the
basis of tips or rumors. The fundamental approach calls up on the investor to make his buy
or sell decision on the basis of a detailed analysis of the information about the company,
Department of Management Science
[38]
industry to which the company belongs, and economy. This results in informed investing.
For this the fundamental Analysis makes use of EIC framework of analysis.
Fundamental Analysis involves three steps:
1. Economy Analysis
2. Industry Analysis
3. Company Analysis
ECONOMY ANALYSIS
The performance of the company depends on the performance of the economy. If
the economy is booming, incomes rise and demand for goods will increase, the industries
and companies in general tend to be prosperous. On the other hand, if the economy is in
recession, the performance of companies will be generally bad.
Investors are considered with those variables in the economy, which affect the
performance of the company in which they tend to invest. A study of these economic
variables would give an idea about future corporate earnings and payment of dividend and
interest to investors.
[39]
INDUSTRY ANALYSIS
An investor ultimately invests his money in the securities of one or more specific
companies. Each company can be characterized as belonging to an industry. The
performance of the companies would therefore, be influenced by the fortunes of the
industry to which it belongs.
At any stage of economy, there are some industries, which are fast growing and
others are stagnating or declining. If an industry is growing the companies within the
industries may also be prosperous. The performance of the companies will depend, among
other things, upon the state of industry to which they belong. Industry analysis refers to the
evaluation of the relative strength and weakness of particular industries.
COMPANY ANALYSIS
It is the final stage of fundamental analysis. The economy analysis helps the
investor a broad outline of the prospects of the growth in the economy. The industry
analysis helps the investor to select the industry in which investment would be rewarding.
Now he has to decide the company in which he should invest his money. Company
Analysis provides the answer to this question.
It deals with the estimation of return and risk of individual shares. This calls for
information. Many pieces of information influence investment decisions. Information
regarding companies can be broadly classified into two broad categories: Internal &
External. Internal information consists of data and events made public by companies
concerning their operations. The internal information sources include annual reports to
shareholders, public and private statements of officers of the company, the companys
financial statements etc. External sources of information are those generated independently
outside the company. These prepared by investment services and the financial press.
TECHNICAL ANALYSIS
Technical analysis is the name given to forecasting technique that utilize historical
share price data. Prices of securities in the stock market fluctuate daily on account of
continuous buying and selling. Stock prices move in trend and cycles and are never stable.
Department of Management Science
[40]
The rationale behind technical analysis is that share price behavior repeats itself over time
and analysts attempt to derive methods to predict this repetition. He looks at current price
data to see if any of the established patterns are applicable and, if so, extrapolations can be
made to predict the future price movements. The data used is primarily past share prices.
Other statistics such as volume of trading and stock market indices are also utilized to some
extent.
TOOLS FOR TECHNICAL ANALYSIS
Charting is the key in technical analysis and security prices are what is charted. The
charts form patterns which are studied to reveal the underlying trends. Often share price
movements are erratic and gauging the underlying trend becomes difficult. So as to
smoothen out the apparent erratic movements of share price and highlight the underlying
trend, mathematical tools are used.
EXPONENTIAL MOVING AVERAGE (EMA)
Moving averages are mathematical indicators of the underlying trend of the price
movement. An exponential moving average, also called Exponential Weighted Moving
Averages(EWMA), applies weighing factors which decrease exponentially. The weighing
for each older data point decreases exponentially, giving much importance to recent
observations while still not discarding older observations entirely.
EMA= (Current Closing Price Previous EMA) x Factor + Previous EMA
Where Factor = 2/(n+1)
The EMA for the first day is taken as the closing price of that itself. The EMA from
the second day onwards is calculated using the above formula. A 5 day average would
indicate the short term trend. A 50 day average would indicate medium term trend and a
200 day average would represent the trend line. When the prices of the share intersects and
moves above or below this trend line, it may be taken as the sign of trend reversal.
RATE OF CHANGE INDICATOR (ROC)
[41]
ROC is a popular oscillator which measure the rate of change of the current price as
compared to the price a certain number of days or weeks back.The formula used is
ROC =
Current Price
Price n period ago
PORTFOLIO CONSTRUCTION
Portfolio construction is the process of blending securities in a manner that they
give maximum return at a minimum of risk.
Now that the securities for inclusion in the Portfolio, we proceed with the portfolio
construction, by deciding on how much amount should the investor allocate to each
security. In the present study three different ways of allocation are chosen, based on:
1. Equal amount to the five scrips.
2. Amount in proportion to their projected Price Earnings Ratio.
3. Amount in proportion to their projected EPS.
[42]
PORTFOLIO ANALYSIS
From a given set of securities, any number of portfolios can be constructed by an
investor, by choosing different set of securities and also varying the proportion of
investment in each security. A rational investor attempts to find out most efficient one from
those portfolios. The efficiency of each portfolio can be evaluated only in terms of the
expected return and risk of the portfolio as such. Thus, determining the expected return and
risk of different portfolios is a primary step in portfolio management designated Portfolio
Analysis.
PORTFOLIO RETURN
All investment are characterized by the expectation of a return. In fact, investment
is made with the primary objective of deriving a return. The return may be in the form of
yield plus capital appreciation. Different types of investment promise different rates of
return. The return from an investment depends upon the nature of the investment, the
maturity period etc.
Portfolio returns refers to the total return that may be received if the entire securities
are put together. It need not be the integration of the returns of individual securities. If the
portfolio is well diversified, the returns from the portfolio will be higher than those from
individual securities.
Portfolio return can be calculated using the following formula:
Portfolio return, Rp = ap +p Rm
Rm = market return
PORTFOLIO RISK
Risk is the potential for variability in returns. An investment whose returns are fairly stable
is considered to be a low-risk investment where as an investment whose returns fluctuate
significantly is considered to be a high risk investment.Risk can be mainly classified into
systematic and unsystematic.Systematic risk is expressed as beta() and unsystematic
risk is expressed as (a).
Department of Management Science
[43]
Portfolio risk refers to the risk faced due to the ivestment in the entire portfolio. The more
the diversification of the investment in various securities, the lower will be the risk.
Portfolio risk can be calculated using the following formula:
Portfolio Risk
p= p m +
CHAPTER V
RESEARCH METHODOLOGY
Department of Management Science
[44]
RESEARCH METHODOLOGY
This is basically an Analytical research depends on the publicly available data.
The method used in the study is the fundamental and technical analysis of some specific
companies in banking industry. The companies are selected based on market
capitalization. The fundamental analysis includes Economic analysis, Industry analysis
and Company analysis.
SOURCES OF DATA
Data for the study is collected from the secondary sources. Data is collected from
the websites like www.bseindia.com, www.indiabulls.com, www.capitaline.com. Company
websites, books, newspapers and periodicals is also be referred to during the study.
PERIOD OF STUDY
Department of Management Science
[45]
The period of study is conducted for a period of 45 days from April 18th to June 2nd 2010.
Table No.1
Banks and Market Capitalization Rate
SL.NO
MARKET CAPITALISATION as
BANKING COMPANIES
ICICI BANK
97,210.81
HDFC BANK
84,458.26
AXIS BANK
67,386.42
51,954.08
BANK OF INDIA
49,632.96
48,376.23
BANK OF BARODA
42,039.21
CANARA BANK
33,369.75
1,31.991.55
[46]
10
UNION BANK
27,329.29
TOOLS OF ANALYSIS
Fundamental Analysis: Ratios Used
Earnings per share
Payout Ratio
Return on equity
Net worth
1-Average DPOR
=
Average Retention Ratio
Average Return on Equity
TECHNICAL TOOLS:
1. Mathematical Indicators:
a. Exponential Moving Average (MA):
EMA = [(current closing price previous EMA)*factor] + previous EMA
2. Oscillators:
a. Rate of Change Indicator (ROC):
ROC = (current price / price n periods ago.) * 100
b. Moving Average Convergence and Divergence
[48]
[49]
CHAPTER VI
ANALYSIS
AND
INTERPRETATION
Department of Management Science
[50]
The analysis is done using Fundamental analysis and technical analysis and
Portfolio Construction and evaluation is conducted to find the optimal portfolio. Five
companies were selected for the study on the basis of Market Capitalization. Five years of
data are used to do the fundamental Analysis and Eighteen months of data are selected to
do the Technical Analysis. Portfolio is constructed on the basis of Equal Weight, Market
Capitalization and PE Ratio. Treynor and Sharpe Ratio is used to evaluate the Portfolio.
SHARES
[%]
Foreign
94243276.00
14.84426
Institutions
93464733.00
14.72163
122428.00
0.019284
28339401.00
4.46374
377207200.00
59.41392
41503184.00
6.537168
63,48,80,222.00
100.00
Govt. Holding
Non Promoter Corp. Hold.
Promoters
Public and Others
Total
(Source: Secondary Data)
Chart No.3
Department of Management Science
[51]
Foreign
Institutions
15%
15%
59%
Govt Holding
0%
4%
Promoters
Public & Others
2005 06
2006 - 07
2007 - 08
2008 09
Mkt.: High
961.95
1378.70
2475.25
2540.00
1376.40
Low
552.50
684.15
845.00
991.10
894.00
EPS
80.01
81.77
83.91
103.94
133.16
DPS
12.5
14.0
14.0
21.5
21.5
ITEMS
CHART No. 4
[52]
Table No.4
PAY-OUT POLICY
2004 05
2005 06
2006 - 07
2007 - 08
2008 09
Reported EPS
80.01
81.77
83.91
103.94
133.16
DPS
12.50
14.0
14.0
21.50
21.5
0.1562305
0.171212
0.166845
0.206850
0.161460
ITEMS
PAY-OUT RATIO
(Source: Secondary Data)
CHART No.5
[53]
Table No. 5
RETURN ON EQUITY
ITEMS
2004 - 05
2005 - 06
2006 - 07
2007 - 08
2008 09
526.3
526.3
526.3
631.47
634.88
23545.84
27117.79
30772.26
48401.19
48401.19
NET WORTH
24072.14
27644.09
31298.56
49032.66
49036.07
PAT
4304.52
4406.67
4541.31
6729.12
8505.24
17.881750
15.940731
14.509645
13.723751
17.344865
ROE (%)
(Source: Secondary Data)
CHART No.6
Department of Management Science
[54]
Table No.6
NORMALIZED PRICE EARNING RATIO
2004 05
2005 - 06
2006 - 07
2007 - 08
2008 09
Reported EPS
80.01
81.77
83.91
103.94
133.16
Mkt.: High
961.95
1378.70
2475.25
2540.00
1376.40
Mkt.: Low
552.50
684.15
845
991.10
894.00
Mkt.: High/EPS
12.022872
16.860707
29.498868
24.437175
10.336437
Mkt.: Low/EPS
6.905387
8.366760
10.070313
9.535309
6.713728
Average P/E
9.464130
12.613734
19.784591
16.986242
8.525083
ITEMS
CHART No.7
[55]
Dividend declared
-----------------------EPS
Dividend Pay-out Ratio for 5 Years
-----------------------------------------------5
0.156231+0.171212+0.166845+0.206850+0.16146
= ------------------------------------------------------------5
0.172520
1 0.172520
0.82748
[56]
17.88175+15.940731+14.509645+13.723751+17.344865
----------------------------------------------------------5
=
Long term Growth Rate in Equity (g)
Projected DPS
0.82748 x .15880
.1314050
9.464130+12.613734+19.784591+16.986242+8.525083
----------------------------------------------------------------------5
Intrinsic Value
15.8801484
13.474756
133.16 x (1+.1314050)
150.657890
150.657890x 13.474756
2030.07830
21.5 x (1+.1314050)
24.3252075
INTERPRETATION
[57]
The stock is said to be over priced as the intrinsic value of the security
(2030.07830) is lesser than current market price2269.45 (31st March2010). This means that
the investor should sell the share as the price of the security may go up in future. The short
term and long term solvency of the company is unsatisfactory. The projected earnings per
share (EPS) and the dividend per share (DPS) of the security is estimated to be 150.65 and
24.32 respectively.
INFERENCE
Department of Management Science
[58]
The 200 day EMA is rising, shows a long term bullish trend for the stock. The
increasing 50 day EMA shows medium term bullish trend as well. Only the 5 day EMA
shows a small downturn, which is not very significant for the long term investors. From the
chart it is clear that both medium term and long term trend of this scrip is bullish.
CHART No: 9
INFERENCE
[59]
It is very clear from the chart the ROC line is above the zero line, which is the
overbought zone. Ideally, one should sell a share that is overbought. Hence it is highly
advisable to sell this share at this level.
CHART No: 10
INFERENCE
MACD line is above the zero line and do not show any trend of turning down which
means it is bullish and indicates a buying opportunity.
SHARES
[%]
Foreign
72,77,84,145.00
65.37469
Institutions
24,64,56,670.00
22.13847
0.00
0.00
5,26,12,667.00
4.72604
0.00
0.00
8,63,97,160.00
7.7608
1,11,32,50,642.00
100.00
Govt. Holding
Non Promoter Corp. Hold.
Promoters
Public and Others
Total
Department of Management Science
[60]
CHART No: 11
0%
5%
0%
8%
Foreign
Institutions
Govt Holding
22%
Promoters
Public & Others
2005 06
2006 07
2007 - 08
2008 09
Mkt.: High
615.90
925.00
1348.00
1465.00
537.95
Low
330.05
440.00
791.15
282.15
252.75
EPS
25.99
27.35
32.88
36.02
36.11
DPS
8.5
8.5
10.0
11.0
11.0
ITEMS
CHART No.12
Department of Management Science
[61]
Table No: 9
PAY-OUT POLICY
ITEMS
Reported EPS
DPS
PAY-OUT RATIO
2004 - 05
2005 06
2006 07
2007 - 08
2008 -09
25.99
27.35
32.88
36.02
36.11
8.5
8.5
10.0
11.0
11.0
0.327049
0.310786
0.304136
0.305386
0.304625
CHART No.13
[62]
Table No. 10
RETURN ON EQUITY
ITEMS
2004 - 05
2005 06
2006 - 07
2007 - 08
2008 09
736.76
889.83
899.34
1112.68
1113.29
11813.2
21316.16
23413.92
45357.53
48922.00
NET WORTH
12549.96
22205.99
24313.26
46470.21
50035.29
PAT
2005.20
2540.07
3110.22
4157.73
4019.16
ROE (%)
8.032651
CHART No.14
Department of Management Science
[63]
Table No.11
NORMALIZED PRICE EARNING RATIO
2004 - 05
2005 - 06
2006 - 07
2007 - 08
2008 09
Reported EPS
25.99
27.35
32.88
36.02
36.11
Mkt.: High
615.90
925.00
1348.00
1465.00
537.95
Low
330.05
440.00
791.15
282.15
252.75
Mkt.: High/EPS
23.697576
33.820841
40.997567
40.671849
14.897535
Mkt.: Low/EPS
12.699115
16.087751
24.061740
7.833148
6.999446
Average P/E
18.198346
24.954296
32.529654
24.252499
10.948491
ITEMS
CHART NO.15
Department of Management Science
[64]
Dividend declared
=
-----------------------EPS
Dividend Pay-out Ratio for 5 Years
= ---------------------------------------------5
0.327049+0.310786+0.304136+.305386+0.304625
------------------------------------------------------------5
=
0.310396
1 0.310396
0.689604
5
15.97774+11.43867+12.792279+8.947087+8.032651
------------------------------------------------------5
=
11.437685%
Long term Growth Rate in Equity (g) = Average Retention Ratio x Avg. ROE
0.68904 x 0.114377
0.078875
18.198346+24.954296+32.529654+24.252499+10.948491
= ---------------------------------------------------------------------5
Intrinsic Value
Projected DPS
22.176657
36.11 x (1+0.078875)
38.958176
38.958176 x 22.176657
863.962112
11.00 x (1+0.078875)
11.867625
INTERPRETATION
[66]
The stock is said to be over priced as the intrinsic value of the security (863.96) is
less than current market price875.70 (31st March 2010). This means that the investor
should sell the share as the price of the security may come down in future. The short term
and long term solvency of the company is unsatisfactory. The projected earning per share
(EPS) and the dividend per share (DPS) of the security is estimated to be 38.95 and 11.86
respectively
CHART No: 16
[67]
INFERENCE
The 200 day EMA indicates a trend reversal. The medium term EMA shows an upward
trend and is good for investors to hold the shares. The short term EMA also is on the rise,
which further assures the investor to stay invested in this share.
CHART No: 17
[68]
INFERENCE
The ROC line is moving from above the zero line, which is the oversold region. Those who
want to invest in this share can now get ready to buy this share, since it is advisable to buy
when the share is oversold.
CHART No: 18
INFERENCE
The MACD line above the zero line indicates a bullish trend. It is showing a decline
in the trend reversal. An investor can hold this share for a lesser period.
[69]
SHARES
Foreign
[%]
20,30,58,960.00
47.76234772
4,50,40,249.00
10.59410545
6,102.00
0.001435277
4,60,22,249.00
10.82508578
Promoters
8,24,43,000.00
19.39176303
4,85,73,868.00
11.42526276
42,51,44,428.00
100.00
Institutions
Govt. Holding
Total
(Source: Secondary Data)
CHART No: 19
[70]
Table No.13
BOOK VALUE
2004 - 05
2005 06
2006 - 07
2007 08
2008 09
Mkt.: High
748.55
1150.00
1799.00
1825.00
1124.00
Low
461.15
620.00
890.00
800.00
774.00
EPS
20.84
27.04
34.55
43.42
50.67
DPS
4.5
5.5
7.0
8.5
8.5
ITEMS
CHART No: 20
Table No.14
PAY-OUT POLICY
[71]
ITEMS
Reported EPS
DPS
PAY-OUT RATIO
2004 - 05
2005 06
2006 07
2007 08
2008 09
20.84
27.04
34.55
43.42
50.67
4.5
5.5
7.0
8.5
8.5
0.215931
0.203402
0.202605
0.195762
0.167752
CHART No.21
Table No.15
RETURN ON EQUITY
Department of Management Science
[72]
2004 - 05
2005 - 06
2006 07
2007 08
2008 09
Equity Share
309.88
313.14
319.39
354.43
425.14
4209.67
4986.39
6113.76
11142.80
11142.8
NET WORTH
4519.85
5299.53
6433.15
11497.23
11567.94
PAT
665.56
870.78
1141.45
1590.18
2152.09
14.726245
16.431268
17.743252
13.830984
18.603917
ITEMS
ROE (%)
(Source: Secondary Data)
CHART No: 22
Table No.16
NORMALIZED PRICE EARNING RATIO
Department of Management Science
[73]
2004 - 05
2005 06
2006 07
2007 08
2008 09
Reported EPS
20.84
27.04
34.55
43.42
50.67
Mkt.: High
748.55
1150
1799
1825.00
1124.00
Mkt.: Low
461.15
620
890
800.00
774.00
Mkt.: High/EPS
35.918906
42.529586
52.069465
42.031322
22.182751
Mkt.: Low/EPS
22.128119
22.928994
25.759768
18.424689
15.275311
Average P/E
29.023513
32.729290
38.914617
30.228006
18.729031
ITEMS
CHART No: 23
[74]
-----------------------EPS
0.215931+0.203402+0.202605+0.195762+0.167752
--------------------------------------------------------------5
=
0.197090
1 0.197090
0.80291
14.726245+16.431268+17.743252+13.830984+18.603917
= ----------------------------------------------------------5
16.267133
Long term Growth Rate in Equity (g) = Average Retention Ratio x Avg. ROE
0.80291 x 0.162671
0.130610
29.023513+32.729290+38.914617+30.228006+18.729031
----------------------------------------------------------------------5
29.924891
Intrinsic Value
Projected DPS
50. 67 x (1+0.130610)
57.288009
57.288009 x 29.924891
1714.337425
85 x (1+0.130610)
9.610185
INTERPRETATION
The stock is said to be under priced as the intrinsic value of the security (1714.34)
is higher than current market price 1700.40 (31st March 2010). This means that the investor
should buy the share as the price of the security may come up in future. The short term and
long term solvency of the company is unsatisfactory. The projected earnings per share
(EPS) and the dividend per share (DPS) of the security is estimated to be 57.2 and 9.6
respectively
[76]
INFERENCE
The 200 day, 50 day, 5 day EMA lines are showing increasing trend. This is an
indicator of the current upward trend continuing for a longer period either on the short
term, medium term and long term. The investor can stay invested in this share.
CHART No: 25
[77]
INFERENCE
The ROC line is in the overbought region at present and indicates a selling
opportunity. But as it is clear from the graph this is slowly changing and is taking a
downward turn.
CHART No: 26
INFERENCE
The MACD line above the zero line is a clear indicator or the bullish trend which is
visible in this share for some time now. It may go even higher. It may go even higher. The
investor can stay invested in this share for now.
[78]
Table No.17
SHARE HOLDING PATTERN OF AXIS BANK
SHARE HOLDING PATTERN
SHARES
Foreign
Institutions
12,52,00,444.00
34.877114
3,78,47,989.00
10.54332225
0.00
0.00
2,40,12,514.00
6.689171073
15,22,27,205.00
42.4059645
1,96,87,777.00
5.484428177
35,89,75,929.00
100.00
Govt. Holding
Non Promoter Corp. Hold.
Promoters
Public and Others
Total
[%]
CHART No: 27
[79]
Table No.18
BOOK VALUE
2004 05
2005 06
2006 07
2007 - 08
2008 - 09
Mkt.: High
315.00
512.90
1025.00
1291.00
575.50
Low
169.10
221.50
399.00
362.80
278.50
EPS
11.81
16.87
22.62
28.91
45.87
DPS
2.8
3.5
4.5
6.0
6.0
ITEMS
CHART No: 28
Table No.19
PAY-OUT POLICY
Department of Management Science
[80]
ITEMS
Reported EPS
DPS
PAY-OUT RATIO
2004 05
2005 - 06
2006 - 07
2007 - 08
2008 - 09
11.81
16.87
22.62
28.91
45.87
2.8
3.5
4.5
6.0
6.0
0.237087
0.207469
0.198939
0.207541
0.130804
CHART No: 29
Table No.20
RETURN ON EQUITY
Department of Management Science
[81]
2004 - 05
2005 06
2006 - 07
2007 - 08
2008 09
273.80
278.69
281.63
357.71
358.98
2134.39
2593.49
3111.60
3410.79
8410.79
NET WORTH
2408.19
2872.18
3393.23
8768.50
8769.21
PAT
334.58
485.08
659.03
1071.03
1645.21
13.893422
16.888914
19.421907
12.214518
18.761211
ITEMS
ROE (%)
(Source: Secondary Data)
CHART No: 30
[82]
2004 - 05
2005 - 06
2006 - 07
2007 - 08
2008 09
Reported EPS
11.81
16.87
22.62
28.91
45.87
Mkt.: High
315.00
512.90
1025.00
1291.00
575.50
Mkt.: Low
169.10
221.50
399.00
362.80
278.50
Mkt.: High/EPS
26.672312
30.403082
45.313882
44.655828
12.546327
Mkt.: Low/EPS
14.318374
13.129816
17.639257
12.549291
6.071506
Average P/E
20.495343
21.766449
31.476570
28.602560
9.308917
ITEMS
CHART No: 31
Dividend declared
-----------------------EPS
[83]
0.237087+0.207469+0.198939+0.207541+0.130804
---------------------------------------------------------------5
=
0.196368
1 0.196368
0.803632
=13.893422+16.888914+19.421908+12.214518+18.761211
--------------------------------------------------5
16.235995
0.803632 x 0.16235995
0.130478
20.495343+21.766449+31.476570+28.602560+9.308917
-------------------------------------------------------5
=
Department of Management Science
22.329978
[84]
Intrinsic Value
Projected DPS
28.91 x (1+0.130478)
32.68212
32.68212 x 22.329978
729.791021
6 x (1+0.130478)
6.782868
INTERPRETATION
The stock is said to be over priced as the intrinsic value of the security (729.79) is
less than current market price 988.70 (31st March 2010). This means that the investor
should sell the share as the price of the security may come down in future. The short term
and long term solvency of the company is unsatisfactory. The projected earnings per share
(EPS) and the dividend per share (DPS) of the security is estimated to be 32.68 and 6.78
respectively.
[85]
INFERENCE
The long, medium and short term EMA are in a bullish trend. All are showing a
upward trend. Investor with a long term investment perspective can still buy this share at
the current rate.
[86]
CHART No: 33
INFERENCE
The ROC line is above the zero line at present and if it crosses the zero line from
above to below it is a selling opportunity otherwise it is a buying opportunity.
CHART No: 34
INFERENCE
The MACD line above the zero line and it is a bullish trend. But it may go down as the
MACD is just above the zero line. The investor may hold the share for a short term period.
[87]
SHARES
[%]
Foreign
5,77,84,916.00
18.32681821
Institutions
5,77,73,633.00
18.32323975
0.00
0.00
34,10,941.00
1.081799542
18,22,41,300.00
57.79887568
1,40,91,710.00
4.469266815
31,53,02,500.00
100.00
Govt. Holding
Non Promoter Corp. Hold.
Promoters
Public and Others
Total
(Source: Secondary Data)
CHART No: 35
[88]
2004 - 05
2005 06
2006 07
2007 - 08
2008 09
544.00
Mkt.: High
521.00
584.90
700.00
721.00
Low
337.55
300.00
400.00
332.35
EPS
43.98
44.81
47.26
62.77
94.11
DPS
6.0
9.0
10.0
13.0
13.0
286.20
CHART No: 36
[89]
Table No.24
PAY-OUT POLICY
ITEMS
Reported EPS
DPS
PAY-OUT RATIO
2004 - 05
2005 06
2006 07
2007 - 08
43.98
44.81
47.26
62.77
6.0
9.0
10.0
13.0
0.136426
0.200848
0.211595
0.207105
2008 09
94.11
13.0
0.138136
CHART No: 37
[90]
Table No. 25
RETURN ON EQUITY:
2004 - 05
2005 06
2006 07
2007 - 08
2008 09
315.30
315.30
315.30
315.30
315.30
7533.51
8758.68
9796.31
10467.35
10467.35
NET WORTH
7848.81
9073.98
10111.61
10782.65
10782.65
PAT
1410.12
1439.31
1540.08
2048.76
2967.08
17.966036
15.861948
15.230809
19.000524
27.517169
ITEMS
ROE (%)
(Source: Secondary Data)
CHART No: 38
[91]
2005 06
2006 07
2007 - 08
2008 09
Reported EPS
43.98
44.81
47.26
62.77
94.11
Mkt.: High
521.00
584.90
700.00
721.00
544.00
Mkt.: Low
337.55
300.00
400.00
332.35
286.20
Mkt.: High/EPS
11.846294
13.052890
14.811680
11.486379
5.780470
Mkt.: Low/EPS
7.675080
6.694934
8.463817
5.294727
3.041122
Average P/E
9.760687
9.873912
11.637749
8.390553
4.410796
ITEMS
CHART No: 39
[92]
Dividend declared
-----------------------EPS
Dividend Pay-out Ratio for 5 Years
-------------------------------------------5
0.136426+0.200848+0.211595+0.207105+0.138136
--------------------------------------------------------------5
=
0.178822
1 0.178822
0.821178
17.966036+15.861948+15.230809+19.000524+27.517169
-----------------------------------------------------5
19.115297
Long term Growth Rate in Equity (g) = Average Retention Ratio x Avg. ROE
0.821178 x 0.191153
0.156971
9.760687+9.873912+11.637749+8.390553+4.410796
----------------------------------------------------------------5
=
8.814739
[93]
Intrinsic Value
Projected DPS
62.77 x (1+0.156971)
72.623070
72.623070 x 8.814739
640.153407
13 x ((1+0.156971)
15.040623
INTERPRETATION
The stock is said to be over priced as the intrinsic value of the security (640.15) is
less than current market price 906.85 (31st March 2010). This means that the investor
should sell the share as the price of the security may come down in future. The short term
and long term solvency of the company is unsatisfactory. The projected earnings per share
(EPS) and the dividend per share (DPS) of the security is estimated to be 72.62 and 15.04
respectively.
[94]
INFERENCE
The 200 day EMA is rising, shows a long term bullish trend for the stock. The
increasing 50 day EMA shows medium term bullish trend as well. Only the 5 day EMA
shows a small downturn, which is not very significant for the long term investors. From the
chart it is clear that both medium term and long term trend of this scrip is bullish.
CHART No: 41
Department of Management Science
[95]
INFERENCE
The ROC line is above the zero line, which is the overbought zone. Ideally, one
should sell a share that is overbought. Hence it is highly advisable to sell this share at this
level
CHART No: 42
INFERENCE
Since the MACD line is showing is above the zero line it i still the bullish trend and
it does not show any signs of downward turn now and hence is a buying opportunity.
[96]
ITEMS
SBI
ICICI
HDFC
AXIS
PNB
MARKET VALUE
2269.45
875.7
1700.4
988.7
906.85
INTRINSIC VALUE
2030.07
863.96
1714.33
729.79
640.15
CHART No: 43
INTERPRETATION
For all of these Banks except HDFC the market price is higher than the intrinsic
value, the scrip is considered to be over priced and it is not suitable for the investment
purposes. So investor cannot hold his investment in these stock or sell additional shares to
the market. Out of these SBI AXIS and PNB Bank have a significant difference in the
market value and the intrinsic value. So the investment in these two stocks are said to be
less attractive.
[97]
PORTFOLIO MANAGEMENT
CALCULATION OF ALPHA AND BETA
STATE BANK OF INDIA
Return = Closing Opening * 100
Opening
2004-05
2005-06
2006-07
2007-08
2008-09
Opening
642.60
584.80
913.65
1105.25
1776.35
Closing
656.95
968.05
992.90
1598.85
1066.55
X (Index Return)
11.86
63.18
11.98
37.35
-36.42
92.95
2.23
65.53
8.67
44.65
-39.95
81.13
X2
XY
140.65
4648.51
143.52
1395.02
1326.41
7654.11
26.44
4467.83
103.86
1667.67
1454.97
7720.77
B = nXY (X) (Y
2
nX - (X)
= y BX
= 1.04
(5 * 7654.11) 8639.70
= 81.13 1.04 * 92.95
5
5
= -3.11
The Expected Return from SBI, when the Index moves up by 18% can be calculated as:
Ri = +(Rm) = -3.11 + 1.04(18) = 15.61
Department of Management Science
[98]
ICIC1 BANK
Return = Closing Opening * 100
Opening
2004-05
2005-06
2006-07
2007-08
2008-09
Opening
315.20
360.20
590.25
865.90
879.90
Closing
393.00
589.25
853.10
770.10
332.60
X (Index Return)
11.86
63.18
16.98
37.35
-36.42
92.95
24.68
63.58
44.53
-11.06
-62.17
59.56
X2
XY
292.70
4334.88
533.46
-413.09
2264.23
7012.18
140.65
4648.51
143.52
1395.02
1326.41
7654.11
nX - (X)
= y X
= 0.996
(5 * 7654.11) 8639.70
= 59.56 0.97 * 92.95
5
5
= 6.6
The Expected Return from SBI, when the Index moves up by 18% can be calculated as:
Ri = +(Rm) = 6.6 + 0.97(18) = 11.32
[99]
2005-06
2006-07
2007-08
2008-09
Opening
375.10
346.20
433.05
503.40
550.90
Closing
393.30
471.20
471.65
508.15
410.90
X (Index Return)
11.86
63.18
11.98
37.35
-36.42
92.95
4.85
36.10
8.91
0.94
-25.41
25.39
X2
XY
140.65
4648.51
143.52
1395.02
1326.41
7654.11
57.52
2461.29
106.74
35.10
925.43
3586.08
= n XY (X) (Y)
2
nX - (X)
= 0.52
(5 * 7654.11) 8639.70
= -4.59
The Expected Return from SBI, when the Index moves up by 18% can be calculated as:
Ri= +(Rm) = -4.59 + 0.52(18) = 4.77
Department of Management Science
Engineering
[100]
MES College of
AXIS BANK
Return = Closing Opening * 100
Opening
2004-05
2005-06
2006-07
2007-08
2008-09
Opening
155.15
230.10
347.05
467.85
924.30
Closing
242.05
356.35
490.15
781.15
414.50
X (Index Return)
11.86
63.18
11.98
37.35
-36.42
92.95
56.01
54.86
41.23
66.96
-555.15
163.91
X2
XY
664.27
3740.35
493.93
2500.95
2008.56
9408.03
140.65
4648.51
143.52
1395.02
1326.41
7654.11
nX - (X)
= 1.07
(5 * 7654.11) 8639.70
= 12.89
The Expected Return from SBI, when the Index moves up by 18% can be calculated as:
R i= +(Rm) = 12.89 + 1.07(18) = 32.15
Department of Management Science
Engineering
[101]
MES College of
HDFC BANK
Return = Closing Opening * 100
Opening
2004-05
2005-06
2006-07
2007-08
2008-09
Opening
375.90
537.20
826.60
1026.15
1514.85
Closing
544.25
773.50
949.40
1379.95
967.85
Y
44.78
43.98
14.85
28.63
-36.10
96.14
X (Index Return)
11.86
63.18
11.98
37.35
-36.42
92.95
X2
XY
531.09
2998.55
177.90
1069.33
1314.76
6091.63
140.65
4648.51
143.52
1395.02
1326.41
7654.11
nX2 - (X)2
= 0.72
(5 * 7654.11) 8639.70
= 5.84
The Expected Return from SBI, when the Index moves up by 18% can be calculated as:
Ri = +(Rm) = 5.84 + 0.72(18) = 18.80
Department of Management Science
Engineering
[102]
MES College of
2004-05
2005-06
2006-07
2007-08
2008-09
Opening
2074.68
2406.95
4112.59
4379.37
5769.05
Closing
2320.86
4048.24
4605.89
6015.47
3667.79
[103]
MES College of
PORTFOLIO CONSTRUCTION
1. BASED ON EQUAL WEIGHT
2. BASED ON PE RATIO
3. BASED ON MARKET CAPITALIZTION
ALFHA, BETA AND RETURN
BANKS
ALFA
BETA
RETURN
SBI
-3.1
1.04
15.61
ICICI
-6.6
0.996
11.32
HDFC
5.84
0.72
18.80
AXIS
12.89
1.07
32.15
PNB
-4.89
0.52
4.77
MARKETVARIENCE CALCULATIONS
Market Variance = NX (X)
N
= 5*7654.11 8639.70
25
= 1185.2
WORKING NOTE
X (INDEX RELATION)
11.86
63.18
11.98
37.35
-36.42
TOTAL = 92.95
X
140.65
4648.51
143.52
1395.02
1326.41
TOTAL = 7654.11
[104]
MES College of
Scrips
SBI
ICICI
HDFC
PNB
AXIS
TOTAL
Weight age
0.20
0.20
0.20
0.20
0.20
1.00
Table No: 28
Percentage
20
20
20
20
20
100
*W
-0.622
-1.32
1.168
-0.918
2.578
0.886
*W
0.208
0.199
0.144
0.104
0.214
0.869
PORTFOLIO RETURN
Rp = p+pRm
0.886+(0.869*18.59)
= 17.04
PORTFOLIO RISK
p = p* m
p = 0.755*1185.2 = 29.91
(Note: Residual Variance has been ignored)
[105]
MES College of
Scrips
SBI
ICICI
HDFC
PNB
AXIS
TOTAL
P/E Ratio
13.47
22.17
29.92
22.32
8.81
96.69
Table No: 29
Weight age
0.14
0.23
0.30
0.23
0.10
1
Percentage
14
23
30
23
10
100
Weight
0.14
0.23
0.30
0.23
0.10
1
*weight
-0.435
-1.518
1.752
-0.459
2.964
2.304
*weight
0.145
0.229
0.216
0.052
0.246
0.888
PORTFOLIO RETURN
Rp = p+pRm
2.30+(0.888*18.59)
= 18.807
PORTFOLIO RISK
p = p* m
p = 0.8570*1185.2 = 30.57
(Note: Residual Variance has been ignored)
[106]
MES College of
Scrips
SBI
Percentage
30
ICICI
97.210.81
0.22
22
HDFC
84,458.26
0.20
20
PNB
51,954.08
0.12
12
AXIS
67,386.42
0.16
16
TOTAL
433001.12
100
Weight
*weight *weight
0.30
-0.933
0.312
Security
SBI
Alpha
-3.11
Beta
1.04
ICICI
-6.6
0.966
0.22
-1.452
0.212
HDFC
5.84
0.72
0.20
1.168
0.144
PNB
-4.59
0.52
0.12
-0.550
0.062
AXIS
12.89
1.07
0.16
2.062
0.171
TOTAL
4.43
4.32
0.295
0.901
PORTFOLIO RETURN
Rp = p+pRm
0.295+(0.901*18.59)
= 17.04
PORTFOLIO RISK
p = p* m
p = 0.8118*1185.2 = 31.01
(Note: Residual Variance has been ignored)
Department of Management Science
Engineering
[107]
MES College of
PORTFOLIO EVALUATION
It is the last step in the process of portfolio management. Through portfolio evaluation
investors tries to find out how well the portfolio has performed. Portfolio evaluation
comprises of performance measurement and performance evaluation. Sharpe ratio(S.R) and
Treynor ratio(TR) are the two statistical tools used in the performance measurement.
SHARPE RATIO
SR = Rp-Rf
p
TREYNOR RATIO
TR = Rp-Rf
Bp
RISK FREE (Rf) FACTORS
Rf value is taken as
Rf = 6.76
[108]
MES College of
SR CALCULATION
Based on Equal Weight
Rp=17.04
p=29.91
p=0.869
S.R = 17.04-6.764 = 0.343
29.91
Based on PE Ratio
Rp=18.80
p =30.57
p=0.888
SR = 18.80-6.764 = 0.393
30.57
[109]
MES College of
T R CALCULATION
TR = 17.04-6.764 = 11.82
0.869
Based on PE Ratio
TR = 18.80-6.764 = 13.55
0.888
Based on Market Capitalization
TR = 17.04-6.764 = 11.405
0.901
Comparison of SR & TR
SR
RANK
TR
RANK
0.343
II
11.82
II
0.393
13.55
0.331
III
11.405
III
INFERENCE
From the portfolio evaluation using Treynor and Sharpe Ratio it is found that Portfolio
based on PE Ratio is ranked best among the other types of portfolios.
[110]
MES College of
CHAPTER VII
FINDINGS, SUGGESTIONS
&
CONCLUSION
[111]
MES College of
FINDINGS
1. FUNDAMENTAL ANALYSIS
STATE BANK OF INDIA.
The stock is said to be over priced as the intrinsic value of the security is less than
market price.
This means that the investor should sell the share as the price of the security may
come down in future.
In the year 2009, the Net-profit margin, the Return on Equity (ROE) and Earnings
per Share (EPS) has slightly increased, and Average P/E ratio has decreased
slightly.
The projected Earnings per Share (EPS) and Dividend per Share (DPS) of the
security is estimated to be Rs. 150.68 and Rs. 24.325 respectively.
ICICI BANK.
The stock is said to be over priced as the intrinsic value of the security is less than
market price.
This means that the investor should sell the share as the price of the security may
come down in future.
In the year 2009, the Net-profit margin, Return on Equity (ROE) and Average P/E
ratio has slightly decreased.
The projected Earnings per Share (EPS) and the dividend per share (DPS) of the
security is estimated to be 38.96and 118.67 respectively
[112]
MES College of
HDFC BANK
The stock is said to be under priced, as the intrinsic value of the security is higher
than market price.
This means that the investor should buy the share as the price of the security may
come up in future.
In the year 2009, the Net-profit margin has slightly increased, Earnings per Share
(EPS) and the Return on Equity (ROE) has increased slightly.
The projected Earnings per Share (EPS) and the dividend per share (DPS) of the
security is estimated to be 57.29 and 96.1 respectively.
AXIS BANK
The stock is said to be over priced as the intrinsic value of the security is less than
market price.
This means that the investor should sell the share as the price of the security may
come less in future.
In the year 2009, the Net-profit margin has slightly increased, Earnings per Share
(EPS) and the Return on Equity (ROE) has increased.
The projected Earnings per Share (EPS) and Dividend per Share (DPS) of the
security is estimated to be Rs. 32.68 and Rs. 67.82 respectively.
[113]
MES College of
The stock is said to be over priced as the intrinsic value of the security is less than
market price.
This means that the investor should sell the share as the price of the security may
come down in future.
In the year 2009, the Net-profit margin has slightly increased, Earnings per Share
(EPS) and the Return on Equity (ROE) has increased.
The projected Earnings per Share (EPS) and Dividend per Share (DPS) of the
security is estimated to be Rs. 72.62 and Rs.150.41 respectively
2. TECHNICAL ANALYSES
The short term EMA 5 days gives a slightly bearish trend for all scrips except SBI
and PNB
The medium and long term EMA is bullish for all scrips.
ROC graphs give sell advice on SBI, PNB, ICICI and HDFC bank scrips and buy
for ICICI.
The long term and medium term predictions are bullish for all the selected banking
scrips. This means investor can hold the shares or new investor can buy the shares.
[114]
MES College of
[115]
MES College of
SUGGESTIONS
STATE BANK OF INDIA
The present trend suggest the investors to sell the shares for long term investment, as the
intrinsic value of share is lesser than the market value.
ICICI BANK
As the market price of the share is overvalued when compared to the intrinsic value, it is
advisable for the investors to sell the shares for long term investment. Because the market
price of the shares may decrease in future.
HDFC BANK
There has been a significant difference between the market value and the intrinsic
value. Hence the present trend recommends the investors to buy the share for long term
investment.
AXIS BANK
Since the market price is higher than the intrinsic value, such a share is considered to be
over priced and it is suitable for the investment purpose. If necessary more shares can be
sold.
PUNJAB NATIONAL BANK
The stock price is said to be over priced as the intrinsic value of the security is lesser than
the market price. Here the investor cannot hold the existing shares.
[116]
MES College of
CONCLUSION
The focus of the study was construction of Portfolio and its evaluation to find the
optimal portfolio and Security analysis on the selected five securities in the banking sector.
Out of the ten companies, which were taken them on the basis of market capitalization
from the BSE (Bombay Stock Exchange) list, five companies were selected to perform the
detailed study. Data were selected from the secondary sources. The analysis was done with
five years data. Both relevant fundamental and technical analysis were used for the
analysis.
The fundamental analysis had shown the real position of the Indian economy,
which is in a booming stage and the stock market indicating the best buying and selling
opportunities. Selected banks have been analyzed for their performance in the last five
years. This analysis revealed that all the banks have shown consistently good performance
and the performance is improving every year. Therefore the performances of all these
banks are likely to be much better in the years to come.
This is the best time to invest money in shares, especially in banking sector. Now
the market is moving up from the financial crisis. So the investors recommended to buy the
shares. The intrinsic values of shares are higher than the current market price of shares. It
indicates the coming movement of shares. Based on three portfolios (PE ratio Market
Capitalization and Equal Weight), we invest on the basis of PE Ratio was more profitable.
[117]
MES College of
CHAPTER VIII
BIBLIOGRAPHY
[118]
MES College of
BIBLIOGRAPHY
Prof.
VR
GANESH,
Analysis
of
Banking
Industries,
www.
Woopdia.com/business_article/095345432.htm
www.bse-inda.com
www.capitaline.com
www.indiabuilts.com
www.equitymaster.com
www.economywatch.com
www.cochinstockexchange.com
www.money.rediff.com
[119]
MES College of
CHAPTER XI
ANNEXURE
[120]
MES College of
Year
Mar 09
Mar 08
Mar 07
Mar 06
Mar 05
315.30
315.30
315.30
315.30
315.30
14,338.33
12,003.04
10,120.16
9,061.06
7,846.00
209,760.50
166,457.23
139,859.67
119,684.92
103,166.89
4,374.36
5,446.56
1,948.86
6,664.87
2,718.29
18,151.15
14,826.64
10,285.14
9,623.64
12,222.24
246,939.64
199,048.77
162,529.13
145,349.79
126,268.72
17,058.25
15,258.15
12,372.03
23,394.55
9,460.20
4,354.89
3,572.57
3,273.49
1,397.14
1,628.83
63,385.18
53,991.71
45,189.84
41,055.31
50,672.83
154,702.99
119,501.57
96,596.52
74,627.37
60,412.75
Fixed Assets +
2,397.11
2,315.52
1,009.82
1,030.23
965.23
Other Assets +
5,041.22
4,409.25
4,087.43
3,845.19
3,128.88
0.00
0.00
0.00
0.00
0.00
TOTAL ASSETS
246,939.64
199,048.77
162,529.13
145,349.79
126,268.72
Contingent Liability+
103,650.26
96,951.50
66,758.42
53,035.43
43,001.29
7,561.84
7,104.56
7,942.25
5,704.17
4,046.07
SOURCES OF FUNDS :
Capital +
Reserves Total +
Deposits +
Borrowings +
Other Liabilities & Provisions +
TOTAL LIABILITIES
APPLICATION OF FUNDS :
Cash & Balances with RBI+
Balances with Banks & money at Call+
Investments +
Advances +
[121]
MES College of
Mar 09(12)
Mar 08(12)
Mar 07(12)
Mar 06(12)
Mar 05(12)
Interest Earned +
19,326.16
14,265.02
11,236.14
9,584.15
8,459.85
Other Income +
3,224.42
2,026.46
1,932.71
1,901.00
2,186.36
22,550.58
16,291.48
13,168.85
11,485.15
10,646.21
12,295.30
8,730.86
6,022.91
4,917.39
4,453.11
2,924.38
2,461.54
2,352.45
2,114.98
2,121.23
663.76
563.61
485.00
455.22
384.44
Depreciation +
191.06
170.23
194.80
186.64
183.28
1,712.66
1,072.78
1,945.94
1,777.05
1,457.07
1,701.32
1,264.75
739.21
412.83
494.64
-41.46
-31.50
-120.50
172.73
142.32
19,447.02
14,232.27
11,619.81
10,036.84
9,236.09
3,090.88
2,048.76
1,540.08
1,439.31
1,410.12
1.18
0.70
-254.38
1.89
0.46
3,089.70
2,048.06
1,794.46
1,437.42
1,409.66
0.00
0.00
-13.27
0.00
0.00
0.00
15.52
183.49
0.00
0.00
772.72
512.19
385.02
359.83
352.53
1,572.74
1,072.54
850.03
680.28
859.93
737.78
479.55
459.73
215.71
197.66
7.64
0.00
15.52
183.49
0.00
200.00
130.00
100.00
90.00
60.00
94.63
62.77
47.26
44.81
43.98
416.74
341.98
321.65
287.79
248.93
INCOME :
Total
II. Expenditure
Interest expended +
Payments to/Provisions for Employees
Deferred Tax +
Total
III. Profit & Loss
Reported Net Profit
Extraordinary Items +
Adjusted Net Profit
IV. Appropriations
Transfer to Statutory Reserve +
Transfer to Other Reserves +
Trans. to Government /Proposed Dividend +
Balance carried forward to Balance Sheet
Equity Dividend %
[122]
MES College of
Mar 09
Mar 08
Mar 07
Mar 06
Mar 05
SOURCES OF FUNDS :
Capital +
Reserves Total +
Deposits +
Borrowings +
Other Liabilities & Provisions +
TOTAL LIABILITIES
359.01
357.71
281.63
278.69
273.80
9,854.58
8,410.79
3,111.60
2,593.49
2,134.39
117,374.11
87,626.22
58,785.60
40,113.53
31,712.00
10,185.48
5,624.04
5,195.60
2,680.93
1,781.41
9,985.68
7,606.91
5,935.28
4,117.99
1,898.16
147,758.86
109,625.67
73,309.71
49,784.63
37,799.76
9,419.21
7,305.66
4,661.03
2,429.40
3,448.74
APPLICATION OF FUNDS :
Cash & Balances with RBI+
Balances with Banks & money at Call+
5,597.69
5,198.58
2,257.28
1,212.44
1,054.20
Investments +
46,330.35
33,705.10
26,897.16
21,527.35
15,048.02
Advances +
81,556.77
59,661.15
36,876.48
22,314.23
15,602.92
Fixed Assets +
1,072.89
922.85
673.19
567.71
518.44
Other Assets +
3,781.95
2,832.33
1,944.57
1,733.50
2,127.44
0.00
0.00
0.00
0.00
0.00
TOTAL ASSETS
147,758.86
109,625.67
73,309.71
49,784.63
37,799.76
Contingent Liability+
209,260.30
258,895.60
184,164.75
98,565.38
53,185.74
13,957.31
8,323.39
6,274.63
4,332.20
3,616.98
[123]
MES College of
Mar 09(12)
Mar 08(12)
Mar 07(12)
Mar 06(12)
Mar 05(12)
10,835.49
7,005.32
4,461.66
2,888.79
1,924.16
INCOME :
Interest Earned +
Other Income +
Total
2,977.69
1,810.78
1,013.02
731.73
433.24
13,813.18
8,816.10
5,474.68
3,620.52
2,357.40
II. Expenditure
7,149.28
4,419.96
2,993.32
1,810.56
1,192.98
Interest expended +
997.66
670.25
381.35
240.20
176.86
991.58
755.40
487.53
338.11
247.49
Depreciation +
188.67
158.11
111.86
92.19
81.58
1,700.79
1,166.10
504.38
408.17
154.79
1,095.52
725.59
412.60
296.11
153.72
Deferred Tax +
Total
-137.09
-159.39
-81.36
-55.73
15.40
11,986.41
7,736.02
4,809.68
3,129.61
2,022.82
1,815.36
1,071.03
659.03
485.08
334.58
-4.97
-8.49
-1.70
-1.01
-1.54
1,820.33
1,079.52
660.73
486.09
336.12
0.00
0.00
-31.81
0.00
0.00
1,553.87
1,029.07
731.04
197.41
182.10
453.84
267.76
164.76
121.27
83.64
146.78
26.84
15.64
-282.37
147.88
420.52
251.63
148.79
112.55
87.75
2,348.09
1,553.87
1,029.07
731.04
197.41
100.00
60.00
45.00
35.00
28.00
48.85
28.91
22.62
16.87
11.81
284.49
245.13
120.49
103.06
87.95
[124]
MES College of
Mar 09
Mar 08
Mar 07
Mar 06
Mar 05
SOURCES OF FUNDS :
Capital +
Reserves Total +
Deposits +
Borrowings +
Other Liabilities & Provisions +
TOTAL LIABILITIES
425.38
354.43
319.39
313.14
309.88
14,220.95
11,142.81
6,113.76
4,986.39
4,209.97
142,811.58
100,768.59
68,297.94
55,796.82
36,354.25
2,685.84
4,594.92
2,815.39
2,858.48
4,790.01
22,814.00
16,390.26
13,772.81
9,632.04
5,841.87
182,957.75
133,251.01
91,319.29
73,586.87
51,505.98
13,527.21
12,553.18
5,075.25
3,306.61
2,650.13
APPLICATION OF FUNDS :
Cash & Balances with RBI+
Balances with Banks & money at Call+
3,979.41
2,225.16
3,971.40
3,612.39
1,823.87
Investments +
58,817.55
49,393.53
30,564.80
28,393.96
19,349.81
Advances +
98,883.05
63,426.90
46,944.78
35,061.26
25,566.30
Fixed Assets +
1,706.73
1,175.09
966.67
855.08
708.32
Other Assets +
6,444.72
4,477.15
3,796.39
2,357.57
1,407.55
0.00
0.00
0.00
0.00
0.00
TOTAL ASSETS
183,358.67
133,251.01
91,319.29
73,586.87
51,505.98
Contingent Liability+
405,981.69
593,008.08
328,148.24
214,782.34
140,777.15
8,552.24
6,920.71
4,606.83
2,828.89
2,549.68
[125]
MES College of
Year
Mar 09(12)
Mar 08(12)
Mar 07(12)
Mar 06(12)
Mar 05(12)
16,332.26
10,115.00
6,647.93
4,475.34
3,093.49
INCOME :
Interest Earned +
Other Income +
3,470.71
2,283.15
1,594.59
1,213.64
731.08
19,802.97
12,398.15
8,242.52
5,688.98
3,824.57
Interest expended +
8,911.10
4,887.11
3,179.45
1,929.50
1,315.56
2,238.20
1,301.35
776.86
486.82
276.67
1,580.23
1,135.40
856.26
750.19
431.92
Total
II. Expenditure
Depreciation +
359.91
271.71
219.60
178.59
144.07
3,414.28
2,521.93
1,571.60
1,090.37
677.41
1,054.31
866.25
581.88
359.56
333.89
0.00
-192.58
-96.58
12.17
-20.51
17,558.03
10,791.17
7,089.07
4,807.20
3,159.01
2,244.94
1,590.20
1,141.45
870.78
665.56
2.85
0.43
-0.68
0.19
0.14
2,242.09
1,589.77
1,142.13
870.59
665.42
0.00
0.00
0.00
0.00
0.00
2,574.63
1,932.03
1,455.02
602.34
405.32
561.23
397.55
285.36
217.70
166.39
304.51
197.52
117.16
-395.99
142.44
498.26
352.53
261.92
196.39
159.71
3,455.57
2,574.63
1,932.03
1,455.02
602.34
100.00
85.00
70.00
55.00
45.00
Deferred Tax +
Total
III. Profit & Loss
Reported Net Profit
Extraordinary Items +
Adjusted Net Profit
Prior Year Adjustments +
Profit brought forward
IV. Appropriations
51.08
43.42
34.55
27.04
20.84
344.31
324.39
201.42
169.24
145.86
[126]
MES College of
Mar 09
Mar 08
Mar 07
Mar 06
Mar 05
SOURCES OF FUNDS :
Capital +
1,463.29
1,462.68
1,249.34
1,239.83
1,086.76
48,419.73
45,357.53
23,413.92
21,316.16
11,813.20
218,347.82
244,431.05
230,510.19
165,083.17
99,818.77
Borrowings +
67,323.69
65,648.43
51,256.03
38,521.91
33,544.50
44,295.07
43,517.43
38,882.96
25,897.60
22,172.11
379,849.60
400,417.12
345,312.44
252,058.67
168,435.34
17,536.33
29,377.53
18,706.88
8,934.37
6,344.90
12,430.23
8,663.60
18,414.44
8,105.85
6,585.08
Investments +
103,058.31
111,454.34
91,257.84
71,547.39
50,487.35
Advances +
218,310.85
225,616.08
195,865.60
146,163.11
91,405.15
Reserves Total +
Deposits +
TOTAL LIABILITIES
APPLICATION OF FUNDS :
Fixed Assets +
3,801.62
4,108.90
3,923.42
3,980.71
4,038.04
Other Assets +
24,712.26
21,196.67
17,144.26
13,327.24
9,574.82
0.00
0.00
0.00
0.00
0.00
TOTAL ASSETS
379,849.60
400,417.12
345,312.44
252,058.67
168,435.34
Contingent Liability+
834,683.00
1,211,082.33
562,959.91
395,033.67
268,153.74
6,000.44
4,278.28
4,046.56
4,338.46
2,392.09
[127]
MES College of
Mar 09(12)
Mar 08(12)
Mar 07(12)
Mar 06(12)
Mar 05(12)
31,092.55
30,788.34
21,995.59
14,306.13
9,409.89
INCOME :
Interest Earned +
Other Income +
8,176.26
8,878.85
6,962.95
5,062.22
3,539.67
39,268.81
39,667.19
28,958.54
19,368.35
12,949.56
22,725.94
23,484.24
16,358.50
9,597.45
6,570.89
1,971.70
2,078.90
1,616.75
1,082.29
737.41
1,952.99
1,922.20
1,510.44
1,126.66
850.41
Total
II. Expenditure
Interest expended +
Depreciation +
678.60
578.35
544.78
623.79
590.36
6,825.61
6,550.40
5,283.03
3,844.55
1,676.29
1,793.31
1,569.53
944.32
661.87
176.49
-471.67
-713.36
-446.43
-134.68
342.51
35,476.48
35,470.26
25,811.39
16,801.93
10,944.36
3,758.13
4,157.73
3,110.22
2,540.07
2,005.20
Deferred Tax +
Total
III. Profit & Loss
Reported Net Profit
Extraordinary Items +
Adjusted Net Profit
Prior Year Adjustments +
Profit brought forward
11.37
45.23
85.37
5.60
-1.65
3,746.76
4,112.50
3,024.85
2,534.47
2,006.85
0.00
0.00
0.00
0.00
0.00
2,436.32
998.27
293.44
188.22
53.09
940.00
1,040.00
780.00
636.00
502.00
IV. Appropriations
Transfer to Statutory Reserve +
Transfer to Other Reserves +
1,068.43
302.31
571.12
933.02
645.01
1,376.37
1,377.37
1,054.27
865.83
723.06
2,809.65
2,436.32
998.27
293.44
188.22
110.00
110.00
100.00
85.00
85.00
Equity Dividend %
Earnings Per Share-Unit Curr
Book Value-Unit Curr
32.40
36.03
32.88
27.35
25.99
444.92
417.64
270.35
249.55
170.34
[128]
MES College of
Mar 09
Mar 08
Mar 07
Mar 06
Mar 05
634.88
631.47
526.30
526.30
526.30
SOURCES OF FUNDS :
Capital +
Reserves Total +
Deposits +
Borrowings +
57,312.82
48,401.19
30,772.26
27,117.79
23,545.84
742,073.13
537,403.94
435,521.09
380,046.06
367,047.52
53,713.68
51,727.41
39,703.33
30,641.24
19,184.31
111,308.44
83,961.07
60,283.15
55,829.23
49,767.97
TOTAL LIABILITIES
965,042.95
722,125.08
566,806.13
494,160.62
460,071.94
55,546.17
51,534.61
29,076.43
21,652.70
16,810.33
48,857.63
15,931.72
22,892.26
22,907.30
22,511.77
Investments +
275,953.96
189,501.27
149,148.88
162,534.24
197,097.91
Advances +
542,503.20
416,768.20
337,336.49
261,800.94
202,374.45
APPLICATION OF FUNDS :
Fixed Assets +
3,837.85
3,373.48
2,818.87
2,752.93
2,697.69
Other Assets +
38,344.14
45,015.80
25,533.20
22,512.51
18,579.79
0.00
0.00
0.00
0.00
0.00
TOTAL ASSETS
965,042.95
722,125.08
566,806.13
494,160.62
460,071.94
Contingent Liability+
723,699.75
810,796.48
526,954.66
228,881.38
159,397.30
43,870.57
18,946.80
23,367.51
20,592.95
16,777.31
[129]
MES College of
Mar 09(12)
Mar 08(12)
Mar 07(12)
Mar 06(12)
Mar 05(12)
Interest Earned +
63,788.43
48,950.31
37,242.33
35,979.57
32,428.00
Other Income +
12,694.31
9,487.11
7,429.04
7,528.16
7,121.73
Total
76,482.74
58,437.42
44,671.37
43,507.73
39,549.73
42,915.29
31,929.08
22,184.13
20,390.45
18,483.37
9,747.31
7,785.87
7,932.59
8,123.05
6,907.35
2,927.84
2,382.81
1,942.13
1,808.99
1,506.06
INCOME :
II. Expenditure
Interest expended +
Depreciation +
Other Expenses, Provisions & Contingencies+
Provision for Tax +
763.14
679.98
602.39
763.68
752.21
5,949.51
5,221.49
4,385.54
5,516.29
5,379.62
5,971.52
3,823.50
3,014.61
1,682.71
2,447.22
Deferred Tax +
-1,055.10
-219.43
-19.83
357.89
-230.62
Total
67,219.51
51,603.30
40,041.56
38,643.06
35,245.21
9,121.23
6,729.12
4,541.31
4,406.67
4,304.52
-1.71
7.00
4.52
1.37
-0.52
9,122.94
6,722.12
4,536.79
4,405.30
4,305.04
0.00
0.00
0.00
0.00
0.00
0.34
0.34
0.34
0.34
0.34
5,291.79
4,839.07
3,358.11
2,933.77
2,482.10
1,740.26
366.52
321.16
632.74
1,070.80
2,089.18
1,523.53
862.04
840.16
751.62
IV. Appropriations
0.34
0.34
0.34
0.34
0.34
Equity Dividend %
290.00
215.00
140.00
140.00
125.00
139.76
103.94
83.91
81.77
80.01
912.73
776.48
594.69
525.25
457.38
[130]
MES College of