Security Analysis and Portfolio Management

SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT PROJECT BY- SRUSHTI SHUKLA ROLL NO- 46 TYBBI
STATE BANK OF INDIA

(SBI)) is the largest Indian banking and financial services company (by turnover and total assets) with its headquarters in Mumbai, India. It is state-owned. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidency banks, Bank of Calcutta and Bank of Bombay to form Imperial Bank of India, which in turn became State Bank of India. The government of India nationalised the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. SBI has 14 Local Head Offices and 57 Zonal Offices that are located at important cities throughout the country. It also has around 130 branches overseas. With an asset base of $352 billion and $285 billion in deposits, SBI is a regional banking behemoth and is one of the largest financial institution in the world. It has a market share among Indian commercial banks of about 20% in deposits and loans. The State Bank of India is the 29th most reputed company in the world according to Also SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual survey conducted by Brand Finance and The Economic Times in 2010. The State Bank of India is the largest of the Big Four banks of India, along with ICICI Bank, Punjab National Bank and HDFC Bankits main competitors.
KEY FINANCIAL RATIOS OF STATE BANK OF INDIA

(March 2011) A.
Investment Valuation Ratios:

Dividend per share Free reserves per share (Rs)
....in Rs. Cr....

10 468.29
B. Leverage Ratios Current Ratio Quick Ratio C. Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Dividend yield (%) Price Earnings Ratio Adjusted Cash Flow Times Earnings Per Share Book Value
0.04 8.50
26.03 23.24 1.58 17.38
100.71
116.07 1,023.40
MUTHOOT FINANCE LIMITED

The Muthoot Group is an 124-year-old business house based in India. It has interests in Financial Services, Information Technology, Media, Healthcare, Education, Power Generation, Infrastructure, Plantations, Precious Metals and Hospitality. The Muthoot Group operates in 23 states in India, and has a customer base of over 25 million. It is wholly owned and managed by the Muthoot Family. Muthoot Gold Power is the lifestyle product of Muthoot Finance aimed at mobilizing the Household gold in India which is estimated to be more than 15000 tonnes. Muthoot Finance according to its company website has "the largest gold loan portfolio in the country". Muthoot also provides various financial services such as Insurance distribution, Wealth Management, Foreign Exchange, Money Transfer and Vehicle & Asset Finance. Muthoot Finance was selected as one of the Top 10 Finance companies to work for in India by Naukri.com. Muthoot Finance privately placed 4% of its paid up capital to Private Equity players - Barings India and Matrix Partners India for Rs.1.57 billion, hence valuing the earlier privately held company at over $1 billion. In terms of market capitalisation, Muthoot Finance is the second largest company in Kerala, first being Federal Bank.
KEY FINANCIAL RATIOS OF MUTHOOT FINANCE LIMITED

(March 2011)
A. Investment valuation ratios

Dividend per share Free reserves per share
.....in Rs. Crs....

3.00 -0.01
B. Liquidity And Solvency Ratios

Current Ratio Quick Ratio Debt Equity Ratio 35.38 9.76 5.10
C. Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Dividend yield (%) Earnings Per Share Price earnings ratio Book Value 23.44 23.10 0.00 0.00 37.28
COMPARISON:
State Bank of India being one of the largest Indian banking and financial service of india is one of the top 10 brands of the country. Muthoot Finance Limited is a NBFC. The dividend per share of SBI is Rs. 10 while that of Muthoot finance Pvt. limited is Rs.3.00 The book value of SBI is 1,023 and the book value of Muthoot finance Pvt. limited is 37.28 The P/E ratio of SBI is 37.28 and that of Muthoot Finance is 0.00 The EPS of SBI is 116.07 and the EPS of Muthoot Finance is 0.00
COMMENT:
As per the above comparison , it clearly states that the State Bank of India is a successful bank giving high rate of returns as compared to the Muthoot finance Pvt. limited. Also SBI being a nationalised bank, it is safe to invest and is risk free. Thus, given an option to invest Rs. 10,00,000 in the above two organisations, I would like to take calculated risk and would prefer investing in the ratio of 70:30 for SBI and Muthoot Finance respectively.

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SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT PROJECT BY- SRUSHTI SHUKLA ROLL NO- 46 TYBBI

STATE BANK OF INDIA

KEY FINANCIAL RATIOS OF STATE BANK OF INDIA

Investment Valuation Ratios:

....in Rs. Cr....

26.03 23.24 1.58 17.38

MUTHOOT FINANCE LIMITED

KEY FINANCIAL RATIOS OF MUTHOOT FINANCE LIMITED

A. Investment valuation ratios

.....in Rs. Crs....

B. Liquidity And Solvency Ratios

C. Cash Flow Indicator Ratios

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