HDFC Bank Ltd.

HERO MOTOCROP Nifty 50

Date Close Return Date Close Return Date Close Return
4/30/2013 700.5 4/30/2013 1736.35 4/30/2013 5985.9502
5/31/2013 669.5 -4% 5/31/2013 1663.05 -4% 5/31/2013 5842.2002 -2%
6/30/2013 609.75 -9% 6/30/2013 1819.4 9% 6/30/2013 5742 -2%
7/31/2013 594 -3% 7/31/2013 2046.5 12% 7/31/2013 5471.7998 -5%
8/31/2013 593.05 0% 8/31/2013 2009.25 -2% 8/31/2013 5735.2998 5%
9/30/2013 680.8 15% 9/30/2013 2078.3999 3% 9/30/2013 6299.1499 10%
10/31/2013 661.3 -3% 10/31/2013 2052.95 -1% 10/31/2013 6176.1001 -2%
11/30/2013 665.85 1% 11/30/2013 2075.3 1% 11/30/2013 6304 2%
12/31/2013 628.5 -6% 12/31/2013 1969.2 -5% 12/31/2013 6089.5 -3%
1/31/2014 669.6 7% 1/31/2014 1967.15 0% 1/31/2014 6276.9502 3%
2/28/2014 748.8 12% 2/28/2014 2274.8 16% 2/28/2014 6704.2002 7%
3/31/2014 721.3 -4% 3/31/2014 2200.3501 -3% 3/31/2014 6696.3999 0%
4/30/2014 792.75 10% 4/30/2014 2345.8501 7% 4/30/2014 7229.9502 8%
5/31/2014 821.55 4% 5/31/2014 2724.2 16% 5/31/2014 7611.3501 5%
6/30/2014 834 2% 6/30/2014 2558.3 -6% 6/30/2014 7721.2998 1%
7/31/2014 843.55 1% 7/31/2014 2604.8 2% 7/31/2014 7954.3501 3%
8/31/2014 872.65 3% 8/31/2014 2839.55 9% 8/31/2014 7964.7998 0%
9/30/2014 911.85 4% 9/30/2014 3064.25 8% 9/30/2014 8322.2002 4%
10/31/2014 957.15 5% 10/31/2014 3147.3999 3% 10/31/2014 8588.25 3%
11/30/2014 951.6 -1% 11/30/2014 3106.6499 -1% 11/30/2014 8282.7002 -4%
12/31/2014 1077.35 13% 12/31/2014 2865.5 -8% 12/31/2014 8808.9004 6%
1/31/2015 1054 -2% 1/31/2015 2672.6001 -7% 1/31/2015 8844.5996 0%
2/28/2015 1022.7 -3% 2/28/2015 2639.8 -1% 2/28/2015 8491 -4%
3/31/2015 988.8 -3% 3/31/2015 2328.8999 -12% 3/31/2015 8181.5 -4%
4/30/2015 1050.55 6% 4/30/2015 2696.8501 16% 4/30/2015 8433.6504 3%
5/31/2015 1067.15 2% 5/31/2015 2523.5 -6% 5/31/2015 8368.5 -1%
6/30/2015 1111.65 4% 6/30/2015 2682.7 6% 6/30/2015 8532.8496 2%
7/31/2015 1027.45 -8% 7/31/2015 2392.7 -11% 7/31/2015 7948.9502 -7%
8/31/2015 1068.8 4% 8/31/2015 2394.5 0% 8/31/2015 7948.8999 0%
9/30/2015 1099.6 3% 9/30/2015 2541.6001 6% 9/30/2015 8065.7998 1%
10/31/2015 1077.75 -2% 10/31/2015 2699.1499 6% 10/31/2015 7935.25 -2%
11/30/2015 1082.15 0% 11/30/2015 2694.1001 0% 11/30/2015 7946.3501 0%
12/31/2015 1049.85 -3% 12/31/2015 2565.6499 -5% 12/31/2015 7563.5498 -5%
1/31/2016 971.85 -7% 1/31/2016 2499.8999 -3% 1/31/2016 6987.0498 -8%
2/29/2016 1071.15 10% 2/29/2016 2945.7 18% 2/29/2016 7738.3999 11%
3/31/2016 1132.35 6% 3/31/2016 2897.3999 -2% 3/31/2016 7849.7998 1%
4/30/2016 1181.9 4% 4/30/2016 3098.8999 7% 4/30/2016 8160.1001 4%
5/31/2016 1176.45 0% 5/31/2016 3178.25 3% 5/31/2016 8287.75 2%
6/30/2016 1246.2 6% 6/30/2016 3203.1499 1% 6/30/2016 8638.5 4%
7/31/2016 1291.2 4% 7/31/2016 3541.3501 11% 7/31/2016 8786.2002 2%
8/31/2016 1272.85 -1% 8/31/2016 3413.7 -4% 8/31/2016 8611.1504 -2%
9/30/2016 1259.05 -1% 9/30/2016 3351.8501 -2% 9/30/2016 8638 0%
10/31/2016 1199.6 -5% 10/31/2016 3166.05 -6% 10/31/2016 8224.5 -5%
11/30/2016 1184.45 -1% 11/30/2016 3043.6499 -4% 11/30/2016 8185.7998 0%
12/31/2016 1286.65 9% 12/31/2016 3172.3501 4% 12/31/2016 8561.2998 5%
 1/31/2017 1390.1 8% 1/31/2017 3138.1001 -1% 1/31/2017 8879.5996 4%
2/28/2017 1442.55 4% 2/28/2017 3221.95 3% 2/28/2017 9173.75 3%
3/31/2017 1546.5 7% 3/31/2017 3318.6001 3% 3/31/2017 9304.0498 1%
4/30/2017 1636.2 6% 4/30/2017 3745.45 13% 4/30/2017 9621.25 3%
5/31/2017 1652.05 1% 5/31/2017 3701.3501 -1% 5/31/2017 9520.9004 -1%
6/30/2017 1784.4 8% 6/30/2017 3655.75 -1% 6/30/2017 10077.1 6%
7/31/2017 1776.45 0% 7/31/2017 3995.1001 9% 7/31/2017 9917.9004 -2%
8/31/2017 1805.7 2% 8/31/2017 3774.55 -6% 8/31/2017 9788.5996 -1%
9/30/2017 1808.5 0% 9/30/2017 3849.8999 2% 9/30/2017 10335.3 6%
10/31/2017 1853.7 2% 10/31/2017 3633.6499 -6% 10/31/2017 10226.55 -1%
11/30/2017 1872.4 1% 11/30/2017 3785.1499 4% 11/30/2017 10530.7 3%
12/31/2017 2005.7 7% 12/31/2017 3691.45 -2% 12/31/2017 11027.7 5%
1/31/2018 1884.2 -6% 1/31/2018 3596.7 -3% 1/31/2018 10492.85 -5%
2/28/2018 1886.1 0% 2/28/2018 3542.8 -1% 2/28/2018 10113.7 -4%
3/31/2018 1944.3 3% 3/31/2018 3732.25 5% 3/31/2018 10739.35 6%
4/30/2018 2139.45 10% 4/30/2018 3544.8999 -5% 4/30/2018 10,736.15 0%

Average 2.01% Average 1.42% Average 1.06%

Annual Return 27.00% Annual Return 18.38% Annual Return 13.44%
SD Monthly 5.28% SD Monthly 6.80% SD Monthly 4.00%
SD Annually 18.27% SD Annually 23.56% SD Annually 13.85%
Covariance between
Covariance between HDFC 0.8191 Hero Motocrop and 0.4776
and Nifty 50 Nifty 50
Beta 1.0812 Beta 0.8126
Risk free return 7.27% Risk free return 7.27%
Equity Risk premium 7.5% Equity Risk premium 7.5%
req return 15.4% req return 13.4%

Portfolio HDFC Bank Ltd Hero Motocrop Ltd

Weights 0.6 0.4
Exp return of portfolio 16.20% 7.35% 23.55%
Beta 0.6487 0.3251
CAPM return of portfolio 12.1% 9.7% 21.8%

Hero
HDFC Portfolio
Motocrop
Expecetd return 27.0% 18.4% 23.6%
CAPM Return 15.4% 13.4% 21.8%
 Beta Return
1.0812 15.4%
0.8126 13.4%
0.9738 21.8%
0 7.27%
2.63 27%
1.48 18.4%
1.93 23.6%

Return
30.0%
27.0%

25.0% 23.6%
21.8%

20.0% 18.4%
Rate of Returns

15.4%
15.0% 13.4%

10.0%
7.3%

5.0%

0.0%
0 0.5 1 1.5 2 2.5 3
Beta

Note: From the above SML graph it is seen that the stocks of HDFC Bank Ltd, Hero Motocrop Ltd and the
Portfolio are undervalued.