SUMMER INTERNSHIP PROJECT (SIP)

TITLE OF PROJECT

EQUITY RESEARCH IN BANKING SECTOR

SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE

DEGREE OF MASTER IN MANAGEMENT STUDIES (MMS)

UNIVERSITY OF MUMBAI

SUBMITTED BY-

POOJA KASKAR

ROLL NO-

149

UNDER THE GUIDANCE OF

DR K.V. RAMAKRISHNAN SIR

BATCH

2019-21

VESIM BUSINESS SCHOOL

 Certificate

This is to certify that project titled Equity Research in Banking Sector (Private Sector) is
successfully completed by Ms. Pooja Premanand Kaskar during the first year, in partial
fulfillment of the master’s degree in Management studies recognized by the university of
Mumbai for the academic year 2019-20 through. This project work is original and not submitted
earlier for the award of any degree, diploma or associateship of any other University/ Institute.

Name- Pooja Kaskar

Date-

(Sign of the faculty mentor)

 Declaration

I hereby declare that this project submitted by me to the Vivekanand Education Society’s
Institute of Management is a bonafide work undertaken by me and it is not submitted to any
other University or Institution for the award of any degree, diploma certificate or published any
time before.

Name- Pooja Kaskar

Roll No-

Signature of the Student

 Acknowledgement

I would like to acknowledge a thank you to all the people who have assisted me throughout this
project.

Initially I would like to thank my Institution Vivekanand Education Society’s Institute of

Management Studies & Research, which created a great platform to attain profound
management skills, thereby fulfilling most cherished goals.

I wish to express my thanks to Senior Branch Head- Mr. Iqbal Singh Bansal and Mr.
Pushpender Khuteta for mentoring me throughout the Internship. With their assistance and
guidance I was able to complete my project.

Also, I would like to thank my Guide Prof. K.V. Ramakrishnan, whose timely guidance and
help helped me in completing the project successfully and making it a wonderful learning
experience.

Lastly, I thank all my colleagues who have helped me in the completion of the summer
internship project.

Pooja Kaskar
 Index
Pg.
Chapter Contents
No.
1 1. Executive Summary 1
2. About the Company 2
2.1 Genesis and Vision and Mission of the Company 3-4
2 2.2 Product And Services 5
2.3 Stakeholders of the Company 6
2.4 Location and Operation Details 6
3. On The Job Training 7
3.1 Key Result Areas 7
3.2 Target Assigned 8
3.2.1 What Is a Mutual Fund 8-11
3 3.2.2 Types of Derivatives 12-15
3.2.3 Scams 16
3.2.4 Trading 17-23
3.2.5 Commodities 24-25
3.3 Technical/ Soft Skills Acquired 25
4. Industry Analysis 26
4.1 Size of the Industry 27
4.2 Major Players in the Industry 27
4
4.3 Industry Financials 28-29
4.4 Challenges faced By The Industry 29-30
4.5 SWOT Analysis 31
5. Analysis Of The Data 32
5.1 Choice And Technique Of Data 32
5.1.1 Fundamental Analysis 33-36
5.1.2 Technical Analysis 37
5 5.2 Analysis of Private Sector Banks 38
5.2.1 Axis Bank 38-40
5.2.2 Kotak Mahindra Bank Ltd. 41-43
5.2.3 ICICI Bank 44-46
5.2.4 Bandhan Bank 47-49
6 6. Conclusion 50
 1. Executive Summary

Nowadays financial management is getting more important for the business, because people and
their knowledge are the most important aspects affecting the productivity of the company as well
as the profitability of the company. Financial management is one of the main aspects to measure
the profitability and liquidity positions of a company.

Equity Research primarily means analyzing company’s financials, perform ratio analysis,
forecast the financial in excel (financial modelling) and explore scenarios with an objective of
making buy/sell stock investment recommendation.

The field of equity research is very vast and one has to look into various aspects of the
functioning of the company to get to any conclusion about the possible performance of the
company in the market. Investors like Warren Buffet made a fortune out of investments in the
stock market, which is quite impossible without proper research about their companies.

The main purpose of equity research is to provide investors with detailed financial analysis and
recommendations on whether to buy, hold or sell a particular investment. Banks often use equity
research as a wat of supporting their investment banking and sales and trading clients, by
providing timely, high-quality information and analysis.

The project on “Equity Research in Banking Sector” was carried out by self-study. This is
limited learning and devoting time towards equity research. The reason behind choosing this
project is that it provides hands on experience with what goes on in the stock market on a day to
day basis and the banking industry.

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 2. About the Company

Future Generali India Life Insurance Company Limited is a joint venture between three
leading groups: Future Group – A leading retailer in India, Generali Group- A global
insurance group that features among top 50 smartest companies in the world and
Industrial Investment Trust Limited (IITL) – A leading investment company.
The company was incorporated in September 2007 with the objective of providing retail,
commercial, personal and rural insurance solutions to individuals and corporates to help
them manage and mitigate risks.
Future Generali India has been serving the customers by leveraging upon its global
Insurance expertise in diverse classes of products of Generali Group and the Indian retail
game changers Future Group.
Having firmly established its credentials in this segment and effectively leveraging on the
skill set of both its JV partners, Future Generali India has evolved to become a Total
Insurance Solutions Company.

2
2.1 Genesis and Vision and Mission of the Company

 Vision: -
Our vision is to actively protect and enhance people’s lives.

 Actively: We play a proactive and leading role in improving people lives through
insurance.
 Protect: We are dedicated towards managing and mitigating risks of individuals and
institutions.
 Enhance: Generali is also committed to creating value.
 People: We deeply care about our customer and our employee lives and their future.
 Lives: Ultimately, we have an impact on the quality of people lives-wealth; safety,
advice and service are instrumental in improving a person chosen way of life in the long
term.

 Mission: -
Our mission is to be the first choice by delivering relevant and accessible insurance
solutions.

 First choice: Logical and natural action that acknowledges the best offer in the market
based on clear advantages and benefits.
 Delivering: We ensure achievement striving towards better performance.
 Relevant: Anticipating or fulfilling a real life need or opportunity, tailored to local and
personal needs and habits, perceived as valuable.
 Accessible: Simple and easy to find, understand and use; always available, at a
competitive value for money.
 Insurance solutions: We aim to offer and tailor a combination of protection, advice and
service.

3
 Values: -
Deliver on the promise.

 We tie a long-term contract of mutual trust with our people, customers and stakeholders;
all of our work is about improving the lives of our customers.
 We commit with discipline and integrity to bringing this promise to life and making an
impact within a long lasting relationship.
Value our people
 We value our people, encourage diversity and invest in continuous learning and growth
by creating a transparent, cohesive and accessible working environment. Developing our
people will ensure our Company's long term future.
Live the community
 We are proud to belong to a global Group with strong, sustainable and long lasting
relationships in every market in which we operate. Our markets are our homes.
Be open
 We are curious, approachable and empowered people with open and diverse mindsets
who want to look at things from a different perspective.

4
2.2 Product and Services

Future Generali offers different kinds of simple-to-understand life insurance policies.

These plans will help meet your various needs such as protection, savings, investments,
child’s education, health etc. Various products and services related to Life Insurance are
being provided by the company. Some of the plans include online plans, Savings Plan,
Investment Plans (ULIP), Term Plans, Health Plans, Child Plans, Retirement Plan, Rural
Plan and Group Plans.
Life insurance also helps as an investment tool. It builds your wealth in a planned manner
to meet your financial goals and future expenses such as buying a new house or paying
for your child’s education or marriage. It also helps plan for retirement.
Services such as financial planning, insurance advise, smart living and success strategies
are also being provided by the company.
Some of the popular insurance plans of the company are-

 Term plan- Future Generali Flexi online term plan

 ULIP- Future Generali big dreams plan
 Health plan- Heart and health insurance plan
 Savings Plan- Traditional Plan
 Guaranteed Plan
 Child Plan- Future Generali Assured Education Plan
 Retirement Plan- Future Generali immediate Annuity Plan
 Group Plan- Future Generali Group term life insurance
 Future Generali sampoorna Loan suraksha

5
 2.3 Stakeholders of the Company

 The major stakeholders of the company are as follows-

1. G.N. Bajpai- Chairman

2. Kishore Biyani- Director
3. Krishan Kant Rathi- Director
4. Sanjay Jain- Additional Non- Executive Director
5. Roberto Leonardi- Director
6. Jennifer Sparks- Director
7. Dr. Bidhubhusan Samal- Director
8. Dr. Devi Singh- Independent Director
9. Bhavna Doshi- Independent Director
10. Abhinandan Jain- Independent Director
11. Munish Sharda- Managing Director and CEO

2.4 Location and Operation Details

Registered Office: Future Generali India Insurance Company Limited. (Reg. No 132). CIN:
U66030MH2006PLC165287. India bulls Finance Centre, 6th Floor, Tower 3, Senapati Bapat
Marg, Elphinstone Road, Prabhadevi (W), Mumbai - 400 013.

6
 3. On The Job Training

3.1 Key Result Areas: -

The key result areas in the internship were

1. Entrepreneurship Development- learning various functions, concepts, process and

characteristics of entrepreneurship with real time examples.
2. Research analysis- Examining financial data, combining economic, industry and
company analysis to derive a stocks fair value and forecast future value.
3. Exposure for live trading- Exposure to real time trading in equity, forex and
commodities.
4. Lead Generation- Generating a lead and client acquisition.

7
3.2 Target Assigned: –
Various tasks were assigned over the period of two months which included –

3.2.1 What Is a Mutual Fund?

A mutual fund is a type of financial vehicle made up of a pool of money collected from
many investors to invest in securities such as stocks, bonds, money market instruments,
and other assets. Mutual funds are operated by professional money managers, who
allocate the fund's assets and attempt to produce capital gains or income for the fund's
investors.

 Types of Mutual Funds: -

Mutual Funds can be broadly categorized into three types based on their investment traits
and risks involved.

• Equity funds - Equity funds invest money collected from individual investors
into shares of different companies. When the price of the share rises, the investors make a
profit and vice versa. Equity funds are suitable for those who stay invested for a long
time and who have a higher risk appetite. Example- Diversified equity funds, Equity
linked savings scheme etc.
• Debt Funds - Debt funds invest in fixed income government securities like
treasury bills and bonds or reputed corporate deposits. It is less risky than equities. Debt
funds are suitable for people who are risk-averse and looking at a short investment
horizon. Example – Gilt funds, fixed maturity plans etc.

• Hybrid Funds - As the name suggests, balanced funds invest in both equity and
fixed income funds to balance the risks and maintain a certain return rate. The fund
manager decides the ratio to reap the best of both. Example – Balanced savings fund,
balanced advantage fund.

8
  What Is an Exchange-Traded Fund?
An exchange-traded fund is a basket of securities such as stocks that tracks an underlying
index. An exchange-traded fund is a marketable security meaning it can be bought and
sold since the ETF has a price associated with it. ETFs can contain all types of
investments including stocks, commodities, or bonds.

They enable investors to gain broad exposure to entire stock markets in different
Countries and specific sectors with relative ease, on a real-time basis and at a lower cost
than many other forms of investing. These instruments are beneficial for Investors that
find it difficult to master the tricks of the trade of analyzing and picking stocks for their
portfolio.

 Differences between Mutual Fund and ETF

Attribute Mutual Funds ETFs

Open/Close Ended Open Ended Funds Closed Ended Funds
Management of fund Actively managed funds Passively managed funds
Expense Ratio High Low
Cash Drag Cash Drag Occurs No Cash drag

 Actively Managed Funds -

It is a type of fund wherein the fund manager invests by first understanding, analyzing
and finding best opportunities to make profit. The expense ratio is a bit on the higher
side. The best example is mutual funds.
 Passively Managed Funds -
It is a fund whose investment securities are not chosen by a portfolio manager, but
instead are automatically selected to match an index or part of the market. This is the
opposite of an actively managed fund. Example - An S&P 500 index fund is a passively
managed fund that mimics the S&P 500 index.

 Tracking error –
Refers to the difference between an index and ETF index in terms of returns.

9
 Cash Drag –
In case of Mutual Funds, fund manager do not invest the whole amount, instead they
keep a certain percentage of investors’ money with them and invest the rest.
 Bharat 22 Index –
This index consists of 19 government companies which have 61% weightage and 3
private companies (L&T, Axis, ITC) which accounts for remaining 31% weightage.

 Factors affecting the market

1. News – Positive or Negative
2. Industry specific pricing
3. Supply and Demand
4. IPO/FPO
5. Marco and Micro-economic Factors
6. Merger and Acquisitions
7. Top Management
8. Market Sentiments
9. Substitutes
10. Incidental Transactions
11. Demographics

 Types of Mutual Funds: -

1. Based on Asset Class

a. Equity Funds
b. Debt Funds
c. Money Market Funds
d. Hybrid Funds
2. Based on Structure
a. Open-ended Funds
b. Closed-ended Funds
c. Interval Funds
3. Based on Investment Goals
a. Growth Funds
b. Income Funds
c. Liquid Funds
d. Tax-Saving Funds

10
4. Based on Risk
a. Very Low-Risk Funds
b. Low-Risk Funds
c. Medium Risk Funds
d. High-Risk Funds
5. Specialized Mutual Funds

11
3.2.2 Types of Derivatives: -

 Exchange Traded Derivatives

 Stock Options and Futures
 Index Options and Futures
 Currency Derivatives
 Over the Counter derivatives
 Swaps
 Forwards
 Interest rate derivatives
 Energy derivatives
 Weather Derivatives

 Exchange Traded Derivatives: -

 Chicago Mercantile Exchange (CME) was established in 1919

 Chicago Board Options Exchange (CBOE) in 1973
 MCX, NMCE, NCDEX in early 2000
 Stock and index derivatives started in 2000

 Over the Counter derivatives: -

OTC market consists of Telephone and computer linked network of dealers. Trades are done
over the phone and are usually between two financial institutions or between a financial
institution and one of its clients.

Market size is multiple times as compared to Exchange traded derivatives. Trades in the OTC
market are typically much larger than trades in the exchange-traded market.

A key advantage of the OTC market is that the terms of a contract do not have to be those
specified by an exchange. Market participants are free to negotiate any mutually attractive deal.

A disadvantage is that there is usually some credit risk in an OTC trade.

 Forward contracts: -
Forward contract is relatively a simple derivative. It is an agreement to buy or sell an asset at a
certain future time for a certain price. One of the parties to a forward contract assumes a long
position and agrees to buy the underlying asset on a certain specified future date for a certain
specified price. The other party assumes a short position and agrees to sell the asset on the same
date for the same price.

12
  Future Contracts: -
A future is a standardized forward contract, a legal agreement to buy or sell something at a
predetermined price at a specified time in the future, between parties not known to each other
The predetermined price the parties agree to buy and sell the asset for is known as the forward
price. The specified time in the future—which is when delivery and payment occur—is known as
the delivery date.

 Options: -

Option derivatives: -

An option derivative is a financial instrument whose value depends upon the few basic input
variables related to underlying assets. The option provides the buyer/holder the option to buy or
sell a specified quantity of an underlying asset at a fixed price (known as strike price or an
exercise price) at or before the expiration date of the option. Since it is an option and not an
obligation, the buyer of the option can choose not to execute the contract and allow the option to
expire. There are two types of options – call options and put options. The different types of
option are:

 Call option and put option

 American and European options
 In the money, at the money and out of the money options.

 Call options and put options: -

A call option gives the buyer of the option the right to buy the underlying asset at a fixed strike
price (K), at any time before the expiry date of the option contract. The buyer pays a price for
this right known as option premium. If at expiry date, the value of the asset (S) is less than the
strike price, the option is not exercised and expires worthless. If, on the other hand, the value of
the asset is greater than the strike price, the option is exercised. The buyer of the call option buys
the stock at the strike price and the difference between the asset value and the strike price
comprises the gross profit (payoff) on the investment. The net profit on the investment is the
difference between the gross profit and the premium price paid for the call initially.

A payoff diagram indicates the cash payoff on a call option at expiration. For a call, the net
payoff is negative (and equal to the price paid for the call) if the value of the underlying asset is
less than the strike price. If the price of the underlying asset exceeds the strike price, the gross
payoff is the difference between the value of the underlying asset and the strike price, and the net
payoff is the difference between the gross payoff and the price of the call.

13
A put option gives the buyer of the option the right to sell the underlying asset at a fixed price,
again called the strike or exercise price, at any time prior to the expiration date of the option. The
buyer pays a price for this right. If the price of the underlying asset is greater than the strike
price, the option will not be exercised and will expire worthless. If on the other hand, the price of
the underlying asset is less than the strike price, the owner of the put option will exercise the
option and sell the stock the strike price, claiming the difference between the strike price and the
market value of the asset as the gross profit. Again, netting out the initial cost paid for the put
yields the net profit from the transaction. A put has a negative net payoff if the value of the
underlying asset exceeds the strike price and has a gross payoff equal to the difference between
the strike price and the value of the underlying asset if the asset value is less than the strike price.

 Determinants of Option Value: -

The price of an option is determined by a number of input variables related to the underlying
asset and financial markets.

1. Current value of the underlying asset (S): The value of the options depends upon the value of
the underlying asset. The changes in the market value of the underlying asset affect the value of
the options on that asset. An increase in the value of the asset will increase the value of the calls.
On the other side the value of put options declines due to the increase in the value of the
underlying asset.

2. Volatility in the value of underlying asset: The higher the volatility in the asset value, higher is
the value of the option. This relation is true for both calls and puts. An increase in volatility (risk
measure) increases the probability of the option to be in the money. The buyers of the option
have more potential to earn significant returns from large price movements in the underlying
asset.

3. Dividends paid on the underlying asset: The price of the underlying stock will be expected to
decrease if dividend payments are made during the life of the option. Thus, the value of a call
option on the underlying stock is a decreasing function of the size of expected dividend
payments, and the value of a put option is an increasing function of expected dividend payments.
Dividend payments for call options can be considered as a cost of delaying execution of in-the-
money options. Consider an option on a traded stock. Once a call option is in-the-money, i.e., the
holder of the option will make a gross payoff by executing the option. Executing the call option,
the buyer of the option will get the stocks and also receive the dividends in subsequent periods.
Failing to exercise the option will mean that these dividends are foregone.

4. Strike price of option (K): The option prices depend on the strike price. The price of out of the
money options is always less than the price of the option in the money in case of both call and
put.

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5. Time to expiry (t): The value of both call and put options is high if the time to expiry
increases. This is because the longer time to expiration provides more time for the value of the
underlying asset to move, increasing the value of both types of options. The longer time to expiry
also increases the option to move enough to make profits for the option buyers.

6. Risk free rate of interest (r): The interest income is considered as the opportunity cost for the
buyer as he pays the option premium at the time of purchase of the option. This cost will depend
upon the level of interest rates and the time to expiration on the option. Increases in the interest
rate will increase the value of calls and reduce the value of puts.

The table below summarizes the variables and their predicted effects on call and put prices.

Table: Effects of input variables on the call and put option prices

Input Variable Call option Put Option

Increase in value of underlying asset (S) Increases Decreases
Increase in strike price (K) Decreases Increases
Increase in volatility of underlying asset (σ) Increases Increases
Increase in the time of expiry (t) Increases Increases
Increase in risk free rate (r) Increases Decreases
Increase in dividend payments (y) Decreases Increases

 Currency Swap: -

 It involves principal and interest payments in 1 currency for principal and interest
payments in another
 While, principal amounts are not usually exchanged in an interest rate swap , in a
currency swap, principal amounts are usually exchanged at both the beginning and the
end of the life of the swap
 For the party paying interest in the foreign currency, the foreign principal is received, and
the domestic principal is paid at the beginning of the life of the swap
 At the end of the life of the swap, the foreign principal is paid and the domestic principal
is received
 Can be used to transform a loan in one currency into a loan in another currency
 Can also be used to transform an investment denominated in one currency into an
investment denominated in another currency

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3.2.3 Scams

 2008 Financial Crisis

The global financial crisis (GFC) also known as global economic crisis is believed to have
begun somewhere in early to mid-2007 with a severe economic condition, once a loss of
confidence by US investors within the worth of sub-prime mortgages caused a squeeze.. It is
considered by many economists to have been the most serious financial crisis since the Stock
Market Crash of 1929. This, in turn, resulted in the US Federal Reserve putting a large
amount of capital into the financial markets. Until September 2008, the crisis had worsened
much more as stock markets around the globe crashed and became highly volatile. Consumer
confidence hit rock bottom as many investors had tightened their belts in fear of what could
lie ahead and what would be the consequences resulting out of it.

 Nirav Modi case

Punjab National Bank (PNB), the country's second-largest public sector bank, is currently in
the middle of a ₹11,400 crore transaction fraud cases. PNB informed the Bombay Stock
Exchange that it had detected some "fraudulent and unauthorized transactions" in one of its
branches in Mumbai to the tune of $1771.69 million (approx.). Following which the share
price of the State-owned bank plunged 10%.

Meanwhile, the Central Bureau of Investigation (CBI) received two complaints from PNB
against billionaire diamantaire Nirav Modi and a jewelry company alleging fraudulent
transactions worth about ₹11,400 crore. This was in addition to the ₹280 crore fraud case that
he is already under investigation for, again filed by PNB.

 Satyam Case

A special court under India’s Central Bureau of Investigation (CBI) on April 10 held the
founders and former officials of outsourcing firm, Satyam Computer Services, guilty in an
accounting scam worth Rs7,000 crore ($1.1 billion). B Ramalinga Raju, the company’s
former chairman, has been sentenced to seven years in jail.

The case, which is also called the Enron of India, dates back to 2009. The scam is about
corporate governance and fraudulent auditing practices allegedly in connivance with auditors
and chartered accountants. The company misrepresented its accounts both to its board, stock
exchanges, regulators, investors and all other stakeholders. It is a fraud, which misled the
market and other stakeholders by lying about the company’s financial health.

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3.2.4 Trading

 Trading Basics
 Exchanges
 National Stock Exchange (NSE)

The National Stock Exchange of India Ltd. (NSE) is the leading stock exchange in India and the
second largest in the world by number of trades in equity shares from January to June 2018,
according to World Federation of Exchanges (WFE) report.

NSE launched electronic screen-based trading in 1994, derivatives trading (in the form of index
futures) and internet trading in 2000, which were each the first of its kind in India.

NSE is a pioneer in technology and ensures the reliability and performance of its systems
through a culture of innovation and investment in technology. NSE believes that the scale and
breadth of its products and services, sustained leadership positions across multiple asset classes
in India and globally enable it to be highly reactive to market demands and changes and deliver
innovation in both trading and non-trading businesses to provide high-quality data and services
to market participants and clients.

 Bombay Stock Exchange (BSE)

Established in 1875, BSE (formerly known as Bombay Stock Exchange Ltd.), is Asia's first &
the Fastest Stock Exchange in world with the speed of 6 micro seconds. Over the past 143 years,
BSE has facilitated the growth of the Indian corporate sector by providing it an efficient capital-
raising platform. Popularly known as BSE, the bourse was established as ‘The Native Share &
Stock Brokers' Association’ in 1875. In 2017 BSE became the first listed exchange of India.

Today BSE provides an efficient and transparent market for trading in equity, currencies, debt
instruments, derivatives, mutual funds. Keeping in line with the vision of Shri Narendra Modi,
Honorable Prime Minister of India, BSE has launched India INX, India's 1st international
exchange, in Ahmedabad.

BSE's popular equity index - the S&P BSE SENSEX - is India's most widely tracked stock
market benchmark index. It is traded internationally on the EUREX as well as leading exchanges
of the BRCS nations (Brazil, Russia, China and South Africa)

17
The overall responsibility of development, regulation and supervision of the stock market rests
with the Securities and Exchange Board of India (SEBI), which was formed in 1992 as an
independent authority. Since then, SEBI has consistently tried to lay down market rules in line
with the best market practices. It enjoys vast powers of imposing penalties on market
participants, in case of a breach.

 Market Indices in India

 SENSEX

The BSE SENSEX (S&P Bombay Stock Exchange Sensitive Index), also-called the BSE 30 or
simply the SENSEX, is a free float market weighted stock market index of 30 well established
and financially sound companies listed on Bombay Stock Exchange. The 30 component
companies which are some of the largest and most actively traded stocks, are representative of
various industrial of the Indian economy. Sensex is the stock market index indicator for the
BSE. It was first published in 1986.

The calculation of Sensex is done by a Free-Float method that came into existence from
September 1, 2003. The level of Sensex is a direct indication of the performance of 30 stocks in
the market. The free-float method takes into account the proportion of the shares that can be
readily traded in the market. This does not include the ones held by various shareholders and
promoters or other locked-in shares not available in the market.

 NIFTY

The NIFTY 50 index is National Stock Exchange of India’s benchmark stock market index for
Indian equity market. Nifty is owned and managed by India Index service & products (IISL).
The NIFTY 50 covers 13 sectors of the Indian economy and offers investment managers
exposure to the Indian market in one portfolio. Nifty is the market indicator of NSE. It ideally is
a collection of 50 stocks. It is also referred to as Nifty 50 and CNX Nifty by some as it is owned.
Nifty is also calculated through the free-float market capitalization weighted method. Just like
Sensex, Nifty also follows a mathematical formula based to know the market capitalization. It
multiples the Equity capital with a price to derive the market capitalization. To determine the
Free-float market capitalization, equity capital is multiplied by a price which is further multiplied
with IWF, which is the factor for determining the number of shares available for trading freely in
the market. The Index is determined on a daily basis by taking into consideration the current
market value divided by base market capital and then multiplied by the Base Index Value of
1000.

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 NIFTY 50 Index
 NIFTY Next 50 Index
 NIFTY 100 Index
 NIFTY 200 Index
 NIFTY 500 Index
 NIFTY Midcap 150 Index
 NIFTY Midcap 50 Index
 NIFTY Full Midcap 100 Index
 NIFTY Free Float Midcap 100 Index
 NIFTY Small cap 250 Index
 NIFTY Small cap 50 Index

 Sectoral Indices
 Nifty Auto Index: The Nifty Auto Index is designed to reflect the behavior and
performance of the Automobiles sector which includes manufacturer of cars &
motorcycles, heavy vehicles, auto ancillaries, tyres, etc. The Nifty Auto Index
comprises of 15 stocks that are listed on the National Stock Exchange.
 Nifty Bank Index: Nifty Bank Index is an index comprised of the most liquid and
large capitalized Indian Banking stocks. It provides investors and market
intermediaries with a benchmark that captures the capital market performance of
Indian Banks. The index has 12 stocks from the banking sector which trade on the
National Stock Exchange.
 Nifty Financial Services Index: The Nifty Financial Services Index is designed to
reflect the behavior and performance of the Indian financial market which includes
banks, financial institutions and housing finance and other financial services
companies. The Nifty Finance Index comprises of 15 stocks that are listed on the
National Stock Exchange (NSE).
 Nifty FMCG Index: FMCGs (Fast Moving Consumer Goods) are those goods and
products, which are non-durable, mass consumption products and available off the
shelf. The Nifty FMCG Index comprises of maximum of 15 companies who
manufacture such products which are listed on the National Stock Exchange (NSE).
 Nifty IT Index: Information Technology (IT) industry has played a major role in the
Indian economy. In order to have a good benchmark of the Indian IT sector, IISL has
developed the Nifty IT sector index. Nifty IT provides investors and market
intermediaries with an appropriate benchmark that captures the performance of the IT
segment of the market. Companies in this index are those that have more than 50% of
their turnover from IT related activities like IT Infrastructure, IT Education and
Software Training, Telecommunication Services and Networking Infrastructure,
Software Development, Hardware Manufacturer’s, Vending, Support and
Maintenance.

19
 Nifty Media Index: The Nifty Media Index is designed to reflect the behavior and
performance of the Media & Entertainment sector including printing and publishing.
The Nifty Media Index comprises of stocks that are listed on the National Stock
Exchange (NSE).
 Nifty Metal Index: The Nifty Metal Index is designed to reflect the behavior and
performance of the Metals sector including mining. The Nifty Metal Index comprises
of maximum of 15 stocks that are listed on the National Stock Exchange.
 Nifty Pharma Index: Pharmaceuticals sector is one of the key sectors where Indian
companies have created a global brand for themselves besides software. Indian
companies have taken advantage of the opportunities in the regulated generics market
in the western countries and made deep inroads especially in providing low cost
equivalents of expensive drugs.
 Nifty Private Bank Index: The Nifty Private Bank Index is designed to reflect the
performance of the banks from private sector. The Nifty Private Bank Index
comprises of 10 stocks that are listed on the National Stock Exchange (NSE).
 Nifty PSU Bank Index: The Indian banking system, reaping the benefits of strong
credit off take and improved risk management practices. The public sector banks with
their existing widespread branch network have been primarily increasing their IT
related expenditure. The core profitability of the public sector banks continues to rise
on the back of improving operating efficiencies. Consolidation would further improve
PSU banks’ competitive edge against their private counterparts in servicing customers
— both retail and corporate — in the international and domestic markets.
Recognizing these changing dynamics of Indian banking industry, IISL has
developed Nifty PSU Bank Index to capture the performance of the PSU banks.
 Nifty Realty Index: Real estate sector in India is witnessing significant growth.
Recent dynamics of the market reflected the opportunity of creating wealth across
real estate companies, as proven by recent listings of real estate companies resulting
into prominent growth in public funds and private equity. The main growth thrust is
coming due to favorable demographics, increasing purchasing power, existence of
customer friendly banks & housing finance companies, professionalism in the real
estate sector and favorable reforms initiated by the government to attract global
investors.

20
  Market Timings

 Normal Trading Session

This is the actual time where most of the trading takes place. Its duration is between 9:15 AM to
3:30 PM. You can buy and sell stocks in this session.

 Pre-Opening Session

The duration of the Pre-opening session is between 9:00 AM to 9:15 AM. This is further divided
into three sub-sessions.

9:00 AM to 9:08 AM:

This is the order entry session

You can place an order to buy and sell stocks in this duration.

One can also modify or cancel his orders during this period.

9:08 AM to 9:12 AM:

This session is used for order matching and for calculating the opening price of the normal
session.

You cannot modify or cancel buy/sell order during this time.

9:12 AM to 9:15 AM:

This session is used as a buffer period.

It is used for the smooth translation of pre-opening session to the normal session.

However, most people do not use the pre-opening session and only use the normal session for
trading. That’s why there is still huge volatility even in the normal session after the pre-opening
session.

3:30 PM to 3:40 PM is used for closing price calculation.

The closing price of a stock is the weighted average of the prices between 3:00 PM to 3:30 PM.

21
For the indexes like Sensex & nifty, its closing price is the weighted average of the constituent
stocks for the last 30 minutes i.e. between 3:00 PM to 3:30 PM.

 Post-Closing Session:

The duration of the Post-closing session is between 3:40 PM to 4:00 PM.

You can place orders to buy or sell stocks in the post-closing session at the closing price. If
buyers/sellers are available, then your trade will be confirmed at the closing price. Pre-opening
session and the Post-closing session is only for the cash market. There are no such sessions for
future & options.

 Indicators: -

 Relative Strength Index (RSI): –

RSI is a momentum oscillator that measures the speed and change of price movements.
The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought
when above 70 and oversold when below 30. RSI can also be used to identify the general
trend.

22
 Moving Average: -

Moving is a very common type of indicator used in the technical analysis. Moving
average is mainly used to check the trend of the particular stock whether it is a upward
trend or downward trend, also the resistance level is checked with this indicator. This
indicator is totally customizable so as to any time frame can be selected by the investor.

23
3.2.5 Commodities: -

 Basics of commodities

 What is Commodity?

The commodity is not traded like physical holdings but is based on contracts for a particular
duration of time. These contracts have some defined standards like future price, time duration,
and quantity. An important point to note is that these trading positions are contracts which are
valid only for a particular period of time. Beyond which they expire and are worthless. For
example, Gold futures 1-month contract trading at $ 100 will expire 1 month from now.
Assuming the expiry date is 1st of next month, beyond this date all open positions in the contract
will close and it will cease to exist from 2nd when a new contract for the next month will start
trading on the exchange.

 Forward Market Commission (FMC) regulates commodity market

 Two exchanges:
 Multi Commodity Exchange(MCX)
 National Commodity and Derivative Exchange(NCDEX)
 Timings:
 MCX – 9:00 am to 11:30 PM
 NCDEX – 9:00 am to 5:00 PM
 Equities – Predictions can be made using past data
 MCX – Little prediction can be made, also it is less risky
 NCDEX – No prediction can be made, also it is more risky
 As compared to Equities, commodities have an expiry date so that if the position is not
squared off, the product will be automatically delivered. Also trade in small quantities is not
possible

 Commodities Traded on MCX: -

 Bullion – Gold, Silver { 2 months expiry}

 Contract types
 Gold – 1 kg
 Gold mini – 100gms
 Gold petal – 1 gm.
 Gold Guinea – 8 gm.
 Silver – 30 kg

24
  Silver mini – 5 kg
 Silver Micro – 1 kg

 Energy – Crude oil, Natural gas {1-month expiry}

 Crude oil – released every Wednesday 8:00 PM
 Natural gas – released every Thursday 9:00 PM
 Spices – Cardamom {1-month expiry}
 Fiber – Cotton { 1 month expiry}
 Metal – Aluminum, Copper, Zinc, Nickel, Lead {1 month expiry}

 Commodities Traded on NCDEX

 Turmeric
 RM seeds - Reap mustard
 Coriander
 Soya bean
 Cumin (Jeera)
 Guar Seeds
 Guar gum (exported for medicines)

 More volumes are traded in unregulated market than regulated.

This is because the margin in unregulated market is more and one can buy with less
amount of money, also payment can be managed if one has a well-established network of
brokers or dealers.

3.3 Technical/ Soft Skills Acquired: -

various skills acquired during this period were decision-making skills, leadership,
teamwork, adaptable communication, presentation skills and analytical skills.

25
 4. Industry Analysis

As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalized
and well-regulated one. The financial and economic conditions in the country are much
more superior to any other country in the world. Credit, market and liquidity risk studies
suggest that Indian banks are generally resilient and have withstood the global downturn
well compared to the other countries.

Indian banking industry has recently developed the innovative banking models like
online payments and small finance banks. RBI’s is taking various new measures in
development of the banking sector which may go a long way in helping the restructuring
of the domestic banking industry.

26
 The digital payments system in India has evolved the most among 25 countries with
India’s Immediate Payment Service (IMPS) being the only system at level five in the
Faster Payments Innovation Index (FPII).

4.1 Size of the Industry: -

The Indian banking system consists of 20 public sector banks, 22 private sector banks, 44
foreign banks, 44 regional rural banks, 1,542 urban cooperative banks and 94,384 rural
cooperative banks in addition to cooperative credit institutions. As on January 31, 2020,
the total number of ATMs in India increased to 210,263 and is further expected to
increase to 407,000 by 2021.

Public sector banks’ assets stood at Rs 72.59 lakh crore (US$ 1,038.76 billion) in FY19.

4.2 Major Players in the Industry: -

There are various public sector and private sector banks in India. The major players in the
banking industry of India are the state Bank of India, Axis Bank, Bank of Baroda, Canara
Bank, and Kotak Mahindra Bank, HDFC Bank, ICICI Bank, CITI Bank, HSBC Bank and
many more.

27
4.3 Industry Financials: -

 Asset of the public sector banks were at Rs 72.59 lakh crore (US$ 1,038.76 billion) in
financial year 2019. As per the Reserve Bank of India (RBI), India’s foreign exchange
reserve was at approximately US$ 490.04 billion as of May 22, 2020.
 During the FY16-FY20, credit off-take grew at a CAGR of 13.93 per cent. As of FY20,
total credit extended surged to US$ 1,936.29 billion.
 During FY16–FY20, deposits grew at a CAGR of 6.81 per cent and reached US$ 1.90
trillion by FY20. Credit to non-food industries increased 3.3 per cent y-o-y, reaching Rs
89.1 billion (US$ 1.26 trillion) on February 28, 2020 and Rs 100.80 lakh crore (US$ 1.42
trillion) on March 13, 2020.
 Indian banks are increasingly focusing on adopting integrated approach to risk
management. The NPAs (Non-Performing Assets) of commercial banks has recorded a
recovery of Rs 400,000 crore (US$ 57.23 billion) in FY19, which is highest in the last
four years.
 As per Union Budget 2019-20, investment-driven growth required access to low cost
capital, and this would require investment of Rs 20 lakh crore (US$ 286.16 billion) every
year.
 RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit
information, accessible to all stakeholders. The Insolvency and Bankruptcy Code
(Amendment) Ordinance, 2017 Bill has been passed and is expected to strengthen the
banking sector. Total equity funding of microfinance sector grew 42 per cent y-o-y to Rs
14,206 crore (US$ 2.03 billion) in 2018-19.
 Deposits under Pradhan Mantri Jan Dhan Yojana (PMJDY) increased to Rs 1.28 lakh
crore (US$ 18.16 billion) during the week ended April 8, 2020. As of November 2019,
there were a total of 19 million subscribers under Atal Pension Yojna.
 Rising income is expected to enhance the need for banking services in rural areas, and
therefore, drive the growth of the sector.

28
 The digital payments revolution will trigger massive changes in the way credit is
disbursed in India. Debit cards have radically replaced credit cards as the preferred
payment mode in India after demonetization. Transactions through Unified Payments
Interface (UPI) stood at 1.23 billion in May 2020, valued at Rs 2.18 lakh crore (US$
30.97 billion).
 As per Union Budget 2019-20, the Government proposed a fully automated GST refund
module and an electronic invoice system to eliminate the need for a separate e-way bill.

4.4 Challenges faced By The Industry: -

The banking industry is going through huge transformations in the recent years. The
sector has gone through various shifts from changing business models, various
technologies and regulatory pressures. As the information breaches in banking sector
have become very frequent it is a necessity to follow all the compliances and regulations.
The most common challenges faced by the banking industry are-

1. Customer Retention: -
Clients using financial services expect meaningful and personalized experiences
through intuitive and straightforward interfaces on any device, anywhere, and at any
time. While customer experience can be tricky to quantify, client turnover is
substantial, and client loyalty is rapidly becoming an endangered idea. Client loyalty
is a product born through sturdy relationships that start by comprehending the client
and their expectations. Therefore, understanding the client and engaging with them
appropriately can result in client satisfaction, therefore, decreasing customer churn.

2. Increasing Expectations: -
Nowadays clients are technology savvier, smarter, and more informed and they
expect a high degree of convenience and personalization out of their financial service
experience. As a result, there is a need of digitalized prospects. They have to figure
out techniques to satisfy younger and older generations of banking clients at the same

29
 time. Satisfied clients are critical to a business. Banks will have to keep all clients
happy, therefore maintaining and attracting more investors which is a challenge.

3. A cultural Shift
There has been a cultural shift in almost every sector and banks are not spared in this
process.
There is a need for banking industry to figure out innovation-based resolutions to
financial industry problems. Therefore, financial organizations must promote a
culture filled with technology. Innovation is leveraged to optimize the existing
procedures and processes for maximum efficiency. This cultural transition towards an
innovative-first attitude is a reflection of the greater industry-broad acceptance of
digital transformation.
4. Increased Competition
The financial industry is facing threats that target the most crucial areas of the
service. These threats have forced many financial organizations to go after
partnerships as a stop-gap precaution. Banks are facing competition from various
non-banking financial institutions and insurance companies.
5. Alternate Business Models
The cost that is linked with compliance management is among the numerous financial
service challenges forcing banking institutions to alter the manner they conduct
business. The elevated cost of capital integrated with unrelenting low-interest rates,
decreased proprietary trading, and decreasing return on equity are all pressurizing
traditional source’s financial profitability.
These factors have forced several institutions to establish new service offerings, seek
long-lasting progress in operational efficiencies, and rationalize business lines to
maintain profits. The failure to keep up with the shifting demands is not an option.

6. Regulatory Compliance
This is among the most vital financial industry challenges. Compliance with various
set regulations can significantly strain financial institutions as they gather resources.

30
 Similarly, if banks fail to comply with the regulations, they are faced with costly
consequences. They incur additional risks and cost for them to remain updated on the
latest regulatory changes. Additionally, they have to oversee the controls that are
required to see those requirements satisfied.
4.5 SWOT Analysis: -

 Strength: -
1. Oldest Industries
2. Economic Growth Source
3. Diversified Services
4. Financial Support Provider
 Weaknesses: -
1. Lack of Worldwide Coordination
2. Old Technologies
3. High NPA’S
4. Less Access to Rural Areas
 Opportunities: -
1. Expansions in rural areas
2. Rise in Private Sector Banking
3. Changing Demographics
4. Socio- Cultural Factors
 Threats: -
1. Recession
2. Too much Competition
3. Data Breaches
4. Frauds, Money Laundering

31
 5. Analysis Of The Data

5.1 Choice And Technique Of Data: -

The project is on Equity Research of the banking sector. Hence study has to be done on
the basis of information and news available about the sectors i.e. secondary data by
various modes.
The research has to be done by doing fundamental analysis and technical analysis of
various private sector banks in India. The secondary data for the analysis was collected
from the company websites, internet and various other articles.
However the main source of information was from the annual report issued by the
companies of the previous year’s showing their performance in the prevailing market.
Firstly the data was analyzed on the basis of the banking industry. The industry i.e.
banking was focused on and its performance and relation with the Indian economy was
monitored and then specific stocks were chosen to be invested in depending upon the
fundamentals of the company stocks. These stocks were individually analyzed and then
measured whether it would give maximum returns if invested in them.
Initially what is fundamental and technical analysis and how it is to be done is being
briefed.
In the later part the research on various banks is done with the help of ratio analysis and
technical analysis and also what is the trend of the particular stock in the market is being
mentioned.

32
5.1.1 Fundamental Analysis: -

Fundamental analysis means finding the intrinsic value of the particular company’s stock,
financial strength of the company and comparing it with the market value. The intrinsic value is
calculated by taking into consideration the economic and financial factors of the company. The
end goal of the analyst is to arrive at a number that an investor can compare with a stock’s
current price in order to see whether the stock is undervalued or overvalued.

Fundamental analysis is done with the objective of long term investment into a security. In this
method various books and statements of the company are being studied such as the balance sheet
and profit and loss statement. Also the SWOT and PESTLE analysis of the particular sector or
company is done to decide whether to invest in that company or not.

The various fundamental factors can be categorized into two factors which are quantitative and
qualitative.

Quantitative - They are the measurable characteristics of the business which can be measured in
numbers. The most important source of quantitative analysis is the financial statement of the
company. The profits, revenues, assets, liabilities of the company can be calculated accurately
with this method.

Qualitative- The quantitative fundamentals are less tangible and they include the quality of the
company key executives, patents and proprietary rights.

Fundamental analysis is performed on historical and present data, but with the goal of making
financial forecasts. There are several possible objectives:

 To conduct a company stock valuation and predict its probable price evolution,
 To make a projection on its business performance
 To evaluate its management and make projected decisions,
Fundamental analysis includes:

1. Economic analysis

33
2. Industry analysis

3. Company analysis

On the basis of these three types of analysis the fair value of the company is being determined. It
is then compared with the market price. If the fair value of the stock is higher than the market
price then that stock is bought and if the fair value is less than the market value then that stock is
being sold.

 Stock Valuation

Valuing stocks is an extremely complicated process that can be generally viewed as a

combination of both art and science. Investors may be overwhelmed by the amount of available
information that can be potentially used in valuing stocks (company’s financials, newspapers,
economic reports, stock reports, etc.)

Therefore, an investor needs to be able to filter the relevant information from the unnecessary
noise. Additionally, an investor should know about major stock valuation methods and the
scenarios in which such methods are applicable.

Stock Valuation Methods- some of the popular stock valuation methods are as follows,

1. Dividend Discount Model (DDM)

The dividend discount model is one of the basic techniques of absolute stock valuation. The
DDM is based on the assumption that the company’s dividends represent the company’s cash
flow to its shareholders.

Essentially, the model states that the intrinsic value of the company’s stock price equals the
present value of the company’s future dividends. Note that the dividend discount model is
applicable only if a company distributes dividends regularly and the distribution is stable.

2. Discounted Cash Flow Model (DCF)

The discounted cash flow model is another popular method of absolute stock valuation. Under
the DCF approach, the intrinsic value of a stock is calculated by discounting the company’s free
cash flows to its present value.

34
The main advantage of the DCF model is that it does not require any assumptions regarding the
distribution of dividends. Thus, it is suitable for companies with unknown or unpredictable
dividend distribution. However, the DCF model is sophisticated from a technical perspective.

3. Comparable Companies Analysis

The comparable analysis is an example of relative stock valuation. Instead of determining the
intrinsic value of a stock using the company’s fundamentals, the comparable approach aims to
derive a stock’s theoretical price using the price multiples of similar companies.

The most commonly used multiples include the price-to-earnings (P/E), price-to-book (P/B), and
enterprise value-to-EBITDA (EV/EBITDA). The comparable companies’ analysis method is one
of the simplest from a technical perspective. However, the most challenging part is the
determination of truly comparable companies.

 Stock Valuation Steps: -

 Step 1: Comparing with industry P/E ratio

Banks P/E EPS Valuation

HDFC 29.62 77.4 Undervalued
ICICI 75.42 5.3 Overvalued
Axis 197.29 3.82 Overvalued
Yes Bank 12.99 19.03 Undervalued
Kotak Mahindra 56.93 24 Overvalued
IndusInd Bank 26.43 64.59 Undervalued
Federal Bank 18.89 5.07 Undervalued
IDFC First Bank -14.83 -3.52 Undervalued
JK Bank 12.12 5 Undervalued
RBL Bank 33.05 20.32 Undervalued
Industry 34.87

35
  Step 2: Value Pick

Bank Name EPS(LY) EPS(CY) Value Pick

HDFC 67.76 77.4 Yes
Yes Bank 15.78 19.03 Yes
IndusInd Bank 48.06 64.59 Yes
Federal Bank 4.83 5.07 Yes
IDFC First Bank 3 -3.52 No
JK Bank -33.59 5 Yes
RBL Bank 15.79 20.32 Yes

 Step 3: Growth Pick

Bank Name P/E EPS(LY) EPS(CY) Growth in EPS PEG Growth Pick
ICICI 75.42 15.31 5.3 -65.38% -1.15 No
Axis 197.29 15.4 3.82 -75.19% -2.62 No
Kotak 56.93 18.57 24 29.24% 1.94 No
Mahindra

36
5.1.2 Technical Analysis: -

 Assumptions: -
 Markets discount everything
 The ‘how’ is more important than ‘why’
 Price moves in trends
 History tends to repeat itself

 Basic Terminology: -

 The open – When the markets open for trading, the first price at which a trade executes is
called the opening Price.

 The high – This represents the highest price at which the market participants were willing to
transact for the given day.

 The Low – This represents the lowest level at which the market participants were willing to
transact for the given day.

 The close – The Close price is the most important price because it is the final price at which
the market closed for a particular period of time. The close serves as an indicator for the
intraday strength. If the close is higher than the open, then it is considered a positive day else
negative. Of course we will deal with this in a greater detail as we progress through the
module.

37
 5.2 Analysis of Private Sector Banks

5.2.1 - Axis Bank

The Axis Bank is one of the third largest private sector banks in India with a market
capitalization of ₹2.31 trillion (US$32 billion) (as on 31 March 2020). The headquarters of Axis
Bank is in Mumbai, Maharashtra. It has 4,800 branches, 17,801 ATMs and 4,917 cash recyclers
across the country as of 31 March 2020, and nine international offices. It sells financial services
to large and mid-size companies, SME and retail businesses.

As of 30 June 2016, 30.81% shares are owned by promoters and promoter group (United India
Insurance Company Limited, Oriental Insurance Company Limited, National Insurance
Company Limited, New India Assurance Company Ltd, GIC, LIC and UTI). The remaining
69.19% shares are owned by mutual funds, FIIs, banks, insurance companies, corporate bodies
and individual investors among others.

On January 1, 2019, Amitabh Chaudhry took over as MD and CEO.

 Axis Bank Ratios: -

38
 FY March FY 2019 FY 2018 FY 2017 FY 2016 FY 2015
EPS (%) 19.6 1.8 16.5 35 31.4
Net Profit (Cr) 50,386.00 4,558.00 39530 83,497.00 74,479.00
Net NPA (%) 2.1 3.4 2.1 0.7 0.4
CASA (%) 44.37 53.75 51.41 47.33 44.78
Return on Assets(%) 0.6 0.1 0.6 1.5 1.6
Return on Equity(%) 7.4 0.7 7 15.6 16.6
P/E Ratio 32.3 302.7 32 14 14.9

 Profit & Loss (All Figures in Cr. Adjusted EPS in

Rs.): -

PARTICULARS Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Interest Earned 40,988.04 44,542.16 45,780.31 54,985.77 62,635.16
Other Income 9,371.46 11,691.31 10,967.09 13,130.34 15,536.56
Interest Expended 24,155.07 26,449.04 27,162.58 33,277.60 37,428.95
Operating
Expenses 10,100.82 12,199.91 13,990.34 15,833.41 17,304.62
Total Provisions 3,709.91 12,116.96 15,472.91 12,031.02 18,533.91
Profit Before Tax 12,393.70 5,467.56 121.57 6,974.09 4,904.23
Taxes 4,170.04 1,788.28 -154.11 2,297.48 3,277.01
Net Profit 8,223.66 3,679.28 275.68 4,676.61 1,627.22
Adjusted EPS (Rs.) 34.51 15.36 1.07 18.19 5.77

 Balance Sheet (All Figures are in

Crores.): -

PARTICULARS Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Equity and
Liabilities
Share Capital 476.57 479.01 513.31 514.33 564.34
Total Reserves 52,688.34 55,283.53 62,931.95 66,161.97 84,383.51
Deposits 3,57,967.56 4,14,378.79 4,53,622.72 5,48,471.34 6,40,104.94

39
 Borrowings 1,08,580.38 1,05,030.87 1,48,016.14 1,52,775.78 1,47,954.13
Other Liabilities 20,108.17 26,295.47 26,245.45 33,073.12 42,157.90
Total Liabilities 5,39,821.02 6,01,467.67 6,91,329.58 8,00,996.53 9,15,164.82
Assets
Balance with RBI 22,361.15 30,857.94 35,481.06 35,099.03 84,959.24
Balance with
Banks 10,964.29 19,398.24 7,973.83 32,105.60 12,309.04
Investments 1,31,524.06 1,28,793.37 1,53,876.08 1,74,969.28 1,56,734.32
Advances 3,38,773.72 3,73,069.35 4,39,650.30 4,94,797.97 5,71,424.16
Net Block 3,316.20 3,465.93 3,625.59 3,763.94 3,838.59
Other Assets 32,674.62 45,601.87 50,376.62 59,988.01 85,425.16
Total Assets 5,39,821.02 6,01,467.67 6,91,329.58 8,00,996.53 9,15,164.82

 Axis Bank line chart: -

 Analysis: -

The earning per share has increased gradually over the years. Also the NPA’s are decreasing
which is a positive sign for the company.

We can see that the interest income has increased gradually. Whereas the EPS has decreased
over the years. If we see the advances, the bank has reported 15.49 % YOY, rise. The 3 years
advance growth, it stands at 15.27 %. The Gross NPA and Net NPA were at 4.86 % and 1.56 %
respectively.

40
It is advisable to opt for buy option for Axis Bank with a target price of Rs.600 as the share price
is seen moving up from the previous close which was Rs.446.20 and the last traded price was
Rs.471.20.

5.2.2 - Kotak Mahindra Bank Ltd.

Kotak Mahindra Bank is the second largest private sector bank in India, headed by Uday Kotak.
The headquarters of this bank is in Mumbai, Maharashtra. It offers various banking products and
financial services for corporate and retail customers in the areas of personal finance, investment
banking, life insurance, and wealth management. It has a market capitalization, with 1600
branches & 2519 ATMs.

In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the group's flagship company,
received a banking license from the Reserve Bank of India (RBI). With this, KMFL became the
first non-banking finance company in India to be converted into a bank: Kotak Mahindra Bank
Limited.

In 2015, Kotak Bank acquired ING Vysya Bank in a deal valued at ₹150 billion (US$2.1 billion).
With the merger, total employment jumped to almost 40,000, and the count of branches reached
1,261. After the merger, ING Group, which controlled ING Vysya Bank, owned a 7% share in
Kotak Mahindra Bank.

 Kotak Mahindra Bank Ratios: -

41
 FY March FY 2019 FY 2018 FY 2017 FY 2016 FY 2015
EPS (%) 25.52 21.54 18.57 11.42 24.2
Net Profit (%) 1.35 1.7 1.67 0.79 1.85
Net NPA (%) 0.75 0.98 1.26 1.06 0.92
CASA (%) 52.49 50.75 43.99 38.06 36.35
Return on Assets(%) 1.55 1.54 1.58 1.08 1.76
Return on Equity(%) 11.47 10.89 12.35 8.72 13.19
Net Profit(Cr) 4,865.33 4,084.30 3,411.50 2,089.78 1,865.98

 Profit & Loss (All Figures in Cr. Adjusted

EPS in Rs.) :-

PARTICULARS Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Interest Earned 16,384.18 17,698.93 19,748.50 23,890.05 26,929.61
Other Income 2,612.23 3,477.16 4,052.21 4,657.18 5,372.11
Interest Expended 9,483.81 9,572.78 10,216.81 12,684.25 13,429.95
Operating Expenses 5,471.52 5,618.50 6,425.72 7,514.80 8,850.94
Total Provisions 917.37 836.74 939.95 962.39 2,216.17
Profit Before Tax 3,123.72 5,148.07 6,218.22 7,385.79 7,804.67
Taxes 1,033.94 1,736.57 2,133.92 2,520.46 1,857.49
Net Profit 2,089.78 3,411.50 4,084.30 4,865.33 5,947.18
Adjusted EPS (Rs.) 11.39 18.53 21.43 25.49 31.09

 Balance Sheet (All Figures are in

Crores.): -

PARTICULARS Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Equity and Liabilities
Share Capital 917.19 920.45 952.82 1,454.38 1,456.52
Total Reserves 23,041.87 26,695.62 36,528.83 41,444 47,558.78
Deposits 1,38,643.02 1,57,425.86 1,92,643.27 2,25,880.36 2,62,820.52
Borrowings 20,975.34 21,095.48 25,154.15 32,248.29 37,993.31
Other Liabilities 8,678.96 8,450.68 9,652.15 11,142.98 10,419.68
Total Liabilities 1,92,259.79 2,14,589.96 2,64,933.40 3,12,172.09 3,60,251.68
Assets
Balance with RBI 6,903.43 7,492.43 8,908.51 10,877.52 9,505.05
Balance with Banks 3,976.28 15,079.58 10,711.60 13,798.02 43,787.25
Investments 51,260.22 45,074.19 64,562.35 71,189.09 75,051.55

42
 Advances 1,18,665.30 1,36,082.13 1,69,717.92 2,05,694.81 2,19,748.19
Net Block 1,551.59 1,537.63 1,527.16 1,651.55 1,623.13
Other Assets 9,902.97 9,324 9,505.86 8,961.11 10,536.52
Total Assets 1,92,259.79 2,14,589.96 2,64,933.40 3,12,172.09 3,60,251.68

 Kotak Mahindra Bank Line chart: -

 Analysis: -

The bank has been maintaining a good ROA of 1.72% from the last 3 years which is a healthy
sign of the stock. Also it has been maintaining a good ROE from 3 years which is 12.60%. The
bank has been very well managing its NPA’s, the average of which is 0.81%. However there is
an increase in Provision and contingencies of 130.28%. Also it has been maintaining a good
Capital adequacy Ratio which is 17.89.

The stock has faced resistance and has fallen sharply. Various indicators gave a negative
crossover on it.

Although it is recommendable to take a sell call on this stock with a target price of Rs. 1250 and
the current price is Rs. 1303. And it is recommended to keep a stop loss at Rs. 1365.

43
 5.2.3 - ICICI Bank

ICICI Bank Limited is an Indian multinational banking and financial services company with its
registered office in Vadodara, Gujarat and corporate office in Mumbai, Maharashtra. It offers a
wide range of banking products and financial services for corporate and retail customers through
a variety of delivery channels and specialized subsidiaries in the areas of investment banking,
life, non-life insurance, venture capital and asset management. The bank has a network of 5,275
branches and 15,589 ATMs across India and has a presence in 17 countries.

ICICI Bank is one of the Big Four banks of India. The bank has subsidiaries in the United
Kingdom and Canada; branches in United States, Singapore, Bahrain, Hong Kong, Qatar, Oman,
Dubai International Finance Centre, China and South Africa; as well as representative offices in
United Arab Emirates, Bangladesh, Malaysia and Indonesia. The company's UK subsidiary has
also established branches in Belgium and Germany.

 ICICI Bank Ratios: -

FY March FY 2019 FY 2018 FY 2017 FY 2016 FY 2015

EPS (%) 5.23 10.56 15.31 16.75 19.32
Net Profit (%) -1.77 0.68 1.33 -0.28 1.73
Net NPA (%) 2 5 5 3 2
CASA (%) 49.61 51.68 50.36 45.82 45.46
Return on Assets(%) 0.34 0.77 1.26 1.34 1.72
Return on Equity(%) 3.19 6.63 10.11 11.19 13.89
P/E Ratio 81.86 26.69 17.47 13.42 16.23

44
  Profit & Loss (All Figures in Cr. Adjusted EPS in
Rs.) :-

PARTICULARS Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Interest Earned 52,739.43 54,156.28 54,965.89 63,401.19 74,798.32
Other Income 15,323.05 19,504.48 17,419.63 14,512.16 16,448.62
Interest Expended 31,515.39 32,418.96 31,940.05 36,386.40 41,531.25
Operating Expenses 12,683.56 14,755.06 15,703.94 18,089.06 21,614.41
Total Provisions 11,667.82 15,208.14 17,306.98 19,661.14 14,053.23
Profit Before Tax 12,195.72 11,278.61 7,434.55 3,776.76 14,048.04
Taxes 2,469.43 1,477.52 657.13 413.46 6,117.23
Net Profit 9,726.29 9,801.09 6,777.42 3,363.30 7,930.81
Adjusted EPS (Rs.) 15.21 15.3 10.54 5.22 12.25

 Balance Sheet (All Figures are in

Crores.) :-

PARTICULARS Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Equity and Liabilities
Share Capital 1,163.17 1,165.11 1,285.81 1,289.46 1,294.76
Total Reserves 88,565.72 98,779.71 1,03,867.56 1,07,073.91 1,15,206.16
Deposits 4,21,425.71 4,90,039.06 5,60,975.21 6,52,919.67 7,70,968.99
Borrowings 1,74,807.38 1,47,556.15 1,82,858.62 1,65,319.97 1,62,896.76
Other Liabilities 34,726.44 34,245.16 30,196.40 37,851.46 47,994.99
Total Liabilities 7,20,695.10 7,71,791.45 8,79,189.16 9,64,459.15 10,98,365.15
Assets
Balance with RBI 27,106.09 31,702.41 33,102.38 37,858.01 35,283.96
Balance with Banks 32,762.65 44,010.66 51,067 42,438.27 83,871.78
Investments 1,60,411.80 1,61,506.55 2,02,994.18 2,07,732.68 2,49,531.48
Advances 4,35,263.94 4,64,232.08 5,12,395.29 5,86,646.58 6,45,289.97
Net Block 7,576.92 7,805.21 7,903.51 7,931.43 8,410.29
Other Assets 57,573.70 62,534.55 71,726.80 81,852.17 75,977.67
Total Assets 7,20,695.10 7,71,791.45 8,79,189.16 9,64,459.15 10,98,365.15

45
  ICICI Bank Line Chart: -

 Analysis: -

Looking at the advances of the bank it reported 10.00 % YOY, rise and the 3 years advance
growth is 11.60 %.

Currently the company has a CASA ratio of 45.11 % and its overall cost of liability stands at
4.45 %. Also, the total deposits from these accounts are at Rs 7, 70,968.9946 Cr.

The ROA has an average track record which is at 0.77 %.

The Gross NPA and Net NPA were 0 % and 1.54 % respectively as on the latest financial year.

It is advisable to accumulate the stock of ICICI bank with a target price of Rs. 410 as the share
price moved up by 0.58% from the previous close of Rs.364.05 and the last traded price was
Rs.366.15

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 5.2.4 - Bandhan Bank

Bandhan Bank Ltd. is an Indian banking and financial services company headquartered in
Kolkata, West Bengal. Bandhan Bank is present in 34 out of 37 states and Union Territories of
India. Presently Bandhan Bank has 4,559 banking outlets pan-India serving more than 2.03 crore
customers.

On June 17, 2015, the Reserve Bank of India granted the universal banking license to Bandhan
Bank. The same year, on August 23, the bank started operations with 501 branches, 50 ATMs
and 2,022 DSC.

The bank has mobilized deposits over Rs.60, 610 crore and its total advances stand at Rs. 74,331
crore, as on June 30, 2020.

The then Hon’ble Union Finance Minister, Shri Arun Jaitley, inaugurated the bank on August 23,
2015, in Kolkata, making Bandhan Bank the first bank to be set up in Eastern India post-
Independence.

On March 27, 2018, Bandhan Bank got listed on the bourses and became the 8th largest bank in
India by market capital, on the day of listing itself.

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  Bandhan Bank Ratios: -

FY March FY 2019 FY 2018 FY 2017 FY 2016 FY 2015

EPS (%) 16.36 12.26 10.15 3.4 0.01
Net Profit (%) 2.41 2.61 4.09 2.19 0.11
Net NPA (%) 1 1 0 0 0
CASA (%) 40.75 34.32 29.43 21.55 0
Return on Assets(%) 3.45 3.03 3.67 1.39 0.1
Return on Equity(%) 17.42 14.34 25 8.25 0.11
P/E Ratio 33.9 42.3 0 0 0

 Profit & Loss (All Figures in Cr. Adjusted EPS

in Rs.): -

PARTICULARS Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Interest Earned 1,581.36 3,908.71 4,802.30 6,643.37 10,885.49
Other Income 149.89 411.41 706.18 1,063.05 1,549.20
Interest Expended 648.53 1,505.21 1,770.06 2,147.95 4,561.58
Operating Expenses 615.92 1,022 1,308.31 1,810.28 2,426.54
Total Provisions 53.3 88.43 374.21 735.13 1,393.15
Profit Before Tax 413.51 1,704.47 2,055.90 3,013.05 4,053.42
Taxes 138.26 592.52 710.34 1,061.55 1,029.68
Net Profit 275.25 1,111.95 1,345.56 1,951.50 3,023.74
Adjusted EPS (Rs.) 2.51 10.15 11.28 16.36 18.78

 Balance Sheet (All Figures are in

Crores.): -

PARTICULARS Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Equity and Liabilities
Share Capital 1,095.14 1,095.14 1,192.80 1,193.08 1,610.25
Total Reserves 2,239.36 3,351.31 8,189.14 10,008.66 13,585.21
Deposits 12,088.75 23,228.66 33,869 43,231.62 57,081.50
Borrowings 3,051.65 1,028.94 285 521.35 16,379.18
Other Liabilities 1,281.60 1,532.04 774.11 1,486.99 3,061.66
Total Liabilities 19,756.50 30,236.09 44,310.06 56,441.71 91,717.80
Assets
Balance with RBI 810.29 6,012.07 2,837.07 3,879.15 6,344.91
Balance with Banks 2,363.11 1,352.93 2,673.52 1,923.50 2,008
Investments 3,758.03 5,516.49 8,371.94 10,037.48 15,351.77
Advances 12,437.55 16,839.08 29,713.04 39,643.39 66,629.95
Net Block 236.75 251.79 238.13 222.23 347.27

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Other Assets 150.29 263.74 476.37 626.98 1,014.41
Total Assets 19,756.50 30,236.09 44,310.06 56,441.71 91,717.80

 Bandhan Bank Line Chart: -

 Analysis: -

The CASA growth is very low as it is a newly emerged bank and has not gained much
popularity. Due to this there has been an increase in the provisions and contingencies by 89.51%.

But the bank has been maintaining a healthy ROA of 3.86% since the last 3 years. Also it has a
good Return on Equity (ROE) track record of 3 Years which is 20.44%. The company has a
Good Capital Adequacy Ratio of 27.43.

They have been maintaining their assets very prominently. The Gross NPA and Net NPA stood
at 1.48 % and 0.58 % respectively as on the latest financial year.

According to the latest analysis it is advisable to buy the stock of Bandhan Bank with a target
price of Rs.425. As the share price moved down by 2.47% from the previous close which were
Rs.349.65 and the last traded price of this stock was Rs. 34.50.

49
 6. Conclusion

From the above project report it can be concluded that Equity Research is a very
important aspect in any sector. For investing into any sector or company it is very much
necessary to see the fundamental as well as technical aspect of the company.
It is an essential aspect for every investor to do research for the purpose of doing a wise
investment.
Equity Research of any company includes understanding all the aspects of the business,
application of the checklist that is studying the various ratios and valuation of the stocks
with various methods.
In Fundamental Analysis we deal with finding the intrinsic value of the company’s stock,
financial strength of that company and comparing it with the market price. Also various
statements of the company are being studied such as the Profit & Loss as well as Balance
sheet. Also Fundamental analysis is done with the objective of investment purpose.
In technical analysis, we study the past prices of the shares and forecasting the future
price changes of the stock. Technical analysis is carried out on the basis of two factors
only which is price and volume. In this the trend of the stock is observed whether it is a
upward moving or downward moving trend. Technical analysis is mostly done with the
objective of intra-day trading i.e. for a short period of time.
It is always better and important to analyze the existing stocks in our portfolio, because
some of the stocks which were not there in our portfolio might have started performing
well and can give better returns, as time passes and some stocks may start falling due to
market situation, sector performance or any company related matter, which makes it
necessary to pull out our investment and invest in other stocks in order to earn profit.

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