equity analysis

INTRODUCTION

India is a developing country. Nowadays many people are interested to invest in financial markets especially in equities to get high returns, and to save tax in honest way. Equities are playing a major role in contribution of capital to the business from the beginning .Since the introduction of shares concept, large numbers of investors are showing interest to invest in stock market.

In an industry with uncertainty, stock market is increasingly difficult to predict, if one looks hard enough there may still be a genuine aid for the Day Trader and Short Term Investor. The price of a security represents an agreement. It is the price at which one person agrees to buy andanother agrees to sell. The price atwhich an investor is willing to buy orsell depends primarily on his expectations. If he expects the security's price to rise, he willbuy it; if the investor expects the price to fall, he will sell it. These simple statements are the cause of a major challenge in forecasting security prices, because they refer to human expectations.

Asweallknow,humansexpectationsareneithereasily quantifiable nor predictable. If prices are based on investor expectations, then knowing what a security should sell for (i.e., fundamental analysis) becomes less important than knowing whatother investors expect it to sell for.

But there is usually a fairly strong agreement of a stock's future earnings that theaverage investor cannot disprove Fundamental analysis and technical analysis can co-exist in peace and complement each other. Since all the investors in the stock market want to make the maximum profitspossible, they just cannot afford to ignore either fundamental or technical analysis.

1.1 LIMITATIONS

This study has been conductedpurely to understand Equity analysis of Banking and IT sectors The study is restricted to six companies (Banking - AXIS, ICICI, HDFC and IT TCS, INFOSYS, WIPRO ) basedon Fundamental analysis Detailed study of the topic was notpossible due to limited size of the project. There was a constraint with regard to time allocation for the research study i.e. fora period of 60 days. Suggestions and conclusions are basedon the limited data of one years.

1.2 OBJECTIVES OF THE STUDY

The objective of this project are To analyze our Indian Banking and IT sectors forinvestment purpose by monitoring the growth rate and performance on the basis ofhistorical data. Comparativeanalysisofthe companies understudy Suggesting as to which companys shares would be best to invest.

1.3 SCOPE The scope of the report is limited to understanding the basics of fundamental analysis and apply it to take decision regarding investments in Indian banking and IT sectors.

Ch.2 OVERVIEW OF INDIAN BANKING SECTORThe origin of banking in India can be traced back to almost the Vedic period. The transformation from pure money lending to proper banking appears to have taken place before the times of Manu. Manu, a great Hindu jurist, has devoted a section of his work explaining the deposits and advances and he even laid down certain rules on rates of interest. Throughout Mauryan period and later desi bankers played some role in the economy of the country. However, it was during the Moghul period that indigenous bankers started playing a vital role in lending money and financing of the foreign trade and commerce. Now, India is one of the top 10 economies globally, with enormous potential for the banking sector to grow. The last decade witnessed a tremendous rise in transactions through ATMs, Internet and mobile banking. In 2014, the countrys Rs 81 trillion (US$ 1.34 trillion) banking industry is set for a greater change. Two new banks have already received licenses from the government. Additionally, the Reserve Bank of Indias (RBI) new norms will provide incentives to banks to spot potential bad loans and take corrective steps that will curb the practices of borrowers.

The Indian governments role in expanding the banking industry has been significant. Through the Financial Inclusion Plan (FY 1013), banking connectivity in the country increased more than three-fold to 211,234 villages in 2013 from 67,694 at the start of the plan.

Banks are also looking at new ways to attract customers. In September, 2013, ICICI bank leveraged the popularity of the social platform, and launched its Facebook banking service. The service enables customers to transfer funds and pay bills from the website

2.1 Market Size

The revenue of Indian banks increased four-fold from US$ 11.8 billion to US$ 46.9 billion during the period 20012010. In the same period, the profit after tax increased from US$ 1.4 billion to US$ 12 billion.

In 201314, Indian banks had 170 overseas branches (163 in 201213) while foreign banks had 316 branches in India (309 in 201213).

Credit to housing sector grew at a compound annual growth rate (CAGR) of 11.1 per cent during the period FY 200813. Total banking sector credit is expected to grow at a CAGR of 18.1 per cent (in terms of INR) to touch US$ 2.4 trillion by 2017.

Ch. 3 STRUCTURE OF INDIA BANKING SECTOR

Source: RBI Reserve Bank of India

Ch.4 EVOLUTION OF INDIAN BANKING SECTORTRIGGER EVENTS

PHASESMAJOR CHANGESBeginning of institutional banking with 3 joint stock banksAcceptance of recommendations of the Narasimham committeeHike in the FID ceiling for banking sector & roadmap for liberalizationNationalization of imperial bank and 20 other scheduled commercial banksPhase 4Liberalisation continuesPhase 1Per Nationalistion PhasePhase 2Era of Nationalisation and consolidationPhase 3Introduction of Indian financial &banking sector Reforms and partial liberalisationPhase 4Period of increased Liberalisation Birth of joint stock banking companies Introduction of deposit banking and bank branches State bank of India formed out of imperial bank 20 SCBs nationalized Introduction of social banking FDI Ceiling for the banking sector increased to 74% Roadmap for inclusion of foreign banks declared. Major changes in prudential regulations Interest rates deregulated Entry of Private sector players

Indian banking industry has its foundations in the 18th century, and has had a varied evolutionary experience since then. The initial banks in India were primarily traders banks engaged only in financing activities. Banking industry in the pre-independence era developed with the Presidency Banks, which were transformed into the Imperial Bank of India and subsequently into the State Bank of India. The initial days of the industry saw a majority private ownership and a highly volatile work environment. Major strides towards public ownership and accountability were made with nationalisation in 1969 and 1980 which transformed the face of banking in India. The industry in recent times has recognised the importance of private and foreign players in a competitive scenario and has moved towards greater liberalisation.In the evolution of this strategic industry spanning over two centuries, immense developments have been made in terms of the regulations governing it, the ownership structure, products and services offered and the technology deployed.4.1 RECENT DEVELOPMENTS

Infrastructure Development Finance Company (IDFC) and Bandhan Financial Services Pvt. Ltd. have been chosen among a field of 25 banks by the RBI to set up banks. Approval has been given to the banks, which are both non-banking finance companies.The bank seeks to continue catering to a rural and unbanked customer base from its current branch network. Banks and housing finance companies (HFCs) together enjoyed a 20 per cent growth in home loans in FY 201314, according to Mr RV Verma, Chairman and Managing Director, National Housing Bank. Home loans disbursed by banks and HFCs collectively grew by Rs 1.60 trillion (US$ 26.59 billion) in FY 201314 to reach Rs 9.60 trillion (US$ 159.58 billion) at the end of the fiscal. Jammu and Kashmir (J&K) Bank is looking at opportunities to increase its presence outside the country. The bank is likely to establish branches in London and Dubai to strengthen its relationships with current customers who have business interests in Europe and West Asia.

Indian banks operating abroad enjoyed a higher credit growth in comparison to foreign banks operating in India, as per an RBI survey on international trade in banking services for 201213. According to the survey, growth of credit extended by Indian banks branches operating overseas grew by 31.7 per cent to Rs 585,570 crore (US$ 97.36 billion); credit extended by foreign banks based in India increased 27.5 per cent to touch Rs 307,700 crore ($51.15 billion).Strong growth in agriculture and services sectors as well as the personal loans segment has helped push bank credit growth during the period AprilNovember, 2013 to 7.2 per cent, compared to 6.6 per cent during the same period of 2012, according to a report by credit rating agency CARE Ratings. During the period, loans to the agriculture sector grew by 5.2 per cent compared to 2.3 per cent in 2012.

ICICI Bank is looking at different ways to maximize the digital opportunity for growth. The bank is doubling the number of cities it covers with 'tablet banking' and offering its customers services such as video conferencing, so they can talk to the money managers from the comfort of their homes.

Bank of India (BoI) launched its card-less cash withdrawal facility in March 2014. Under this service, a BOI customer can transfer money to anyone, using the banks ATMs or through Internet banking. The sender has to provide the beneficiarys mobile number, a sender code, and the amount through internet banking or text message. The beneficiary, after receiving a code from the bank can visit any BOI ATM with instant money transfer facility and withdraw the money within a fortnight of the transfer.

4.2 GOVERNMENT INITIATIVESThe RBI has issued extra guidelines for banks giving gold metal loans (GMLs). To safeguard against fraud, the central bank has asked lenders to check the credit worthiness of borrowers; collateral securities against the loan; and trade cycle of the manufacturing activity, before sanctioning the loans. The Cabinet Committee on Economic Affairs (CCEA) has given the green signal to a proposal to increase foreign holding in Axis Bank from 49 per cent to 62 per cent. The move could bring in overseas investment of nearly Rs 7,250 crore (US$ 1.20 billion) into the country. The CCEA nod is dependent on FIIs holding capped at 49 per cent.

4.3 ROAD AHEADIndias banking sector has the potential to become the fifth largest banking sector globally by 2020 and the third largest by 2025. The industry has witnessed noticeable development, with deposits growing at a CAGR of 21.2 per cent (in terms of INR) in the period FY 0613; in FY 13 total deposits stood at US$ 1,274.3 billion.Today, banks are turning their focus to servicing clients. Banks in the country, including those in the public sector, are emphasizing on enhancing their technology infrastructure, in order to improve customer experience and gain a competitive edge. The popularity of internet and mobile banking is higher than ever before, with Customer Relationship Management (CRM) and data warehousing expected to drive the next wave of technology in banks. Indian banks are also progressively adopting an integrated approach to risk management. Most banks already have in place the framework for assetliability match, credit and derivatives risk management.

Ch. 5 FUNDAMENTAL ANALYSIS

5.1 Economy Analysis1) Gross Domestic product GDP is one measure of economic activity. This is the total amount of goods and services produced in a country in a year. It is calculated by adding the market values of all the final goods and services produced in a year. It is a gross measurement because it includes the total amount of goods and services produced, of which some merely replace goods that have depreciated or have worn out. It is domestic production because it includes only goods and services produced within the country.

Source: www.tradingeconomics.com | World Bank Group

The Gross Domestic Product (GDP) in India expanded 1 percent in the fourth quarter of 2013 over the previous quarter. GDP Growth Rate in India averaged 1.62 Percent from 1996 until 2013, reaching an all time high of 5.80 Percent in the fourth quarter of 2003 and a record low of -1.90 Percent in the first quarter of 2009.In India, the growth rate in GDP measures the change in the seasonally adjusted value of the goods and services produced by the Indian economy during the quarter. India is the worlds tenth largest economy and the second most populous.

The most important and the fastest growing sector of Indian economy are services. Trade, hotels, transport and communication; financing, insurance, real estate and business services and community, social and personal services account for more than 60 percent of GDP. Agriculture, forestry and fishing constitute around 12 percent of the output, but employs more than 50 percent of the labor force. Manufacturing accounts for 15 percent of GDP, construction for another 8 percent and mining, quarrying, electricity, gas and water supply for the remaining 5 percent. This page provides - India GDP Growth Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

2) Inflation Inflation can be defined as a trend of rising prices caused by demand exceeding supply. Over time, even a small annual increase in prices of say 1 % will tend to influence the purchasing power of the nation. In others word, if prices rise steadily, after a number of years, consumers will be able to buy only fewer goods and services assuming income level does not change with inflation.

Source: www.tradeeconomics.com | Ministry of Statistics and progamme Implementation ,India

The inflation rate in India was recorded at 8.28 percent in May of 2014. Inflation Rate in India averaged 9.62 Percent from 2012 until 2014, reaching an all-time high of 11.16 Percent in November of 2013 and a record low of 7.55 Percent in January of 2012. Inflation Rate in India is reported by the Ministry of Statistics and Programme Implementation (MOSPI), India.Historically, the wholesale price index (WPI) has been the main measure of inflation in India. However, in 2013, the governor of The Reserve Bank of India Raghuram Rajan had announced that the consumer price index is a better measure of inflation.

India Consumer Inflation Declines in MayIndian annual consumer prices slow down to 8.28 percent in May of 2014 from 8.59 percent in April. It is the lowest rate in three months as food prices slowed slightly. Provisional estimates showed food cost representation at a slower 9.4 percent year-on-year in May, down from 9.66 percent in the previous month. Prices of fruit accelerated to 23.17 percent (21.73 percent in April) while cost of vegetables slowed to 15.27 percent (from 17.5 percent). Meanwhile, prices of fuel and light decelerated to an annual 5.07 percent (5.96 percent in April) and clothing and footwear cost was marginally higher at 8.86 percent (8.83 percent in the previous period). The corresponding provisional inflation rates for rural and urban areas for May of 2014 are 8.86 percent and 7.55 percent.

3) Interest rate Interest rate is the price of credit. It is the percentage fee received or paid by individual or organization when they lend and borrow money. In general, increases in interest rate, whether caused by inflation, government policy, rising risk premium, or other factors, will lead to reduced borrowing and economic slowdown.

Source :www.tradingeconomics.com | Reserve Bank Of India

The benchmark interest rate in India was last recorded at 8 percent. Interest Rate in India averaged 6.64 Percent from 2000 until 2014, reaching an all time high of 14.50 Percent in August of 2000 and a record low of 4.25 Percent in April of 2009. Interest Rate in India is reported by the Reserve Bank of India.In India, interest rate decisions are taken by the Reserve Bank of India's Central Board of Directors. The official interest rate is the benchmark repurchase rate. This page provides - India Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.India Holds Policy Rate at 8%At its June 3rd, 2014 meeting, Reserve Bank of India left the repo rate at 8 percent, but cut the amount of government bonds banks must hold with the central bank - the statutory liquidity ratio - by 50 bps to 22.5 percent, aiming to increase bank credit. The cut in statutory liquidity ratio will take effect from the fortnight beginning June 14, 2014. The central bank also decided to reduce the liquidity provided under the export credit refinance facility from 50 per cent of eligible export credit outstanding to 32 per cent with immediate effect. Policymakers introduced a special term repo facility of 0.25 per cent of net demand and time liabilities to compensate fully for the reduction in access to liquidity under the ECR with immediate effect.5.2 INDUSTRY ANALYSIS

Porters 5 Force Analysis For Banking Sector

Porters model is, applied microeconomic principles to business strategy and analyzed the strategic requirements of industrial sectors, not just specific companies. The five forces are competitive factors which determine industry competition and include: suppliers, rivalry within an industry, substitute products, customers or buyers, and new entrants. Porters 5 force model can help us determine the factors involved and various market forces that influence the functioning of the Bank business model. It helps in understanding the level of competition the banking industry faces, competition is an important factor to determine the level of profits the banking industry can achieve. Understanding the model helps banking industry to gauge its market positions. Understanding the competitors in the market can help the banking industry to gauge its strengths and weakness, and better equip itself to face the ever changing trends in the market, to optimize its profitability.

Let us study the factors:1) Bargaining Power of Suppliers to Banking industryThe term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or services. Supplier bargaining power is likely to be high when: RBI( Reserve Bank Of India) is the supreme controller of the functioning of the bank. Interest rates play a major role in the functioning of the bank. Valuations of Dollar, Euro and Rupee play a major role. Lending and borrowing capability of the bank. The functioning of the bank is very sensitive to the fluctuations in the interest rates of the Federal Reserve Bank in theUS. Since the bank has offshore operations in many countries its interest rate policy and products are directly related to the law of the land and the economy of the country.Analysis : The Bargaining Power of Suppliers is high as there is rise in investment avenues like Mutual Funds, Tax-free bonds, Equity market etc. Providers of funds could be more demanding. As quality of services provided with minimum time matters a lot.

The bank does not have direct influence on the prevailing conditions it should adapt to the market and economic conditions.2) Bargaining Power of Customers for Banking industrySimilarly, the bargaining power of customers determines how much customers can impose pressure on margins and volumes. Customers bargaining power is likely to be high when: They take large volumes of loans and deposit large sums of money; there is a concentration of buyers. The consumers have a wide choice of banks and services to choose, which offer very attractive offers for the consumers. Retail lending (especially mortgage financing) formed a significant portion of the portfolio forbanking industryand they have customized their products to cater to the diverse demands. With better penetration in the semi urban and rural areas the bank garnered a higher proportion of low cost deposits thereby economizing on the cost of funds.Apart from streamlined their processes through technology initiatives such as ATMs, telephone banking, online banking and web based products,banking industryalso resorted to cross selling of financial products such as credit cards, mutual funds and insurance policies to augment their fee based income.Analysis: Bargaining power of customers is very high, as banks have also forayed into the long-term finance.Banking, instead of taking the conventional branch banking model for increasing its outreach, the Bank decided to work with models which would combine the strengths of intermediary forms of organization with the financial bandwidth of a banking institution.3) Threat of New Entrants for banking industryThe competition in this industry will be the higher, if it is easier for other companies to enter this industry. The threat of new entries will depend on the extent to which there are barriers to entry. These are typically: Economies of scale (minimum size requirements for profitable operations) High initial investments and fixed costs Cost advantages of existing players due to experience curve effects of operation with fully depreciated assets Bank reputation and brand loyalty of customers Protected intellectual property like patents, licenses, etc. Scarcity of important resources, e.g. qualified expert financial experts and adequate staff Good network of branches with ATMs channels are controlled by existing players Existing players have close customer relations, e.g. from long-term financial service contracts Moderate switching costs for customersAnalysis: Licensing and Government and RBI requirements, investment in technology, skills required for financial management, distribution reach, good branch networks. The entry of foreign banks is posing a big challenge.4) Threat of Substitutes for banking industryA threat from substitutes exists if there are alternative banking services available with lower prices of better performance parameters for the same purpose. They could potentially attract a significant proportion of market volume and hence reduce the potential sales volume for the bank. This category also relates to complementary products. Similarly to the threat of new entrants, the threat of substitutes is determined by factors like: Close customer relationships Switching costs for customers Performance of substitutes Current trends High returns during Bull market. People are not very conservative and are risk takers.Non-banking financial companies (NBFCs) are privately owned financial intermediates focusing mainly on leasing, hire purchase, car and consumer durable finance, investment banking and advisory services. NBFCs are able to earn higher returns due to their ability to manage high-risk assets. For instance auto financing is high yielding.Banking industryalso faces strong competition from mutual funds and stock markets.Investors awareness of trading in the Indian capital markets is a serious threat to the Revenue generation ofbanking industry.

Analysis: Threat of substitutes is also high as there are large numbers of investment and borrowing avenues. NBFCs and small co-operative banks are also posing a major threat to the market share of the bank.

5) Competitive Rivalry between Existing Players for banking industryThis force describes the intensity of competition between existing players andbanking industryin financial markets. Competition between existing players is likely to be high when There are many players of about the same size Players have similar strategies There is not much differentiation between players and their products, hence, there is much price competition Low market growth rates (growth of a finance organization / individual is possible only at the expense of a competitor) Barriers for exit are high (e.g. expensive and highly specialized service oriented approach) Less paper work in case of rural / local financersAnalysis: There are numerous informal financing in the rural area. There is intense competition due to the large number of capital markets inIndiafor investing.

5.3 COMPANY ANALYSIS

Company ProfileVision

To be the preferred financial solutions provider excelling in customer delivery through insight, empowered employees and smart use of technology

Traded asBSE:532215LSE:AXBCNSE:AXISBANK

IndustryBanking,Financial services

Founded1994 (as UTI Bank)

HeadquartersMumbai,Maharashtra, India

Key peopleDr. Sanjiv Misra (Chairman)Shikha Sharma(MD & CEO)

ProductsCredit cards,consumer banking,corporate banking,finance and insurance,investment banking,mortgage loans,private banking,private equity,wealth management

Revenue340 billion(US$5.7billion) (2012)

Employees42,420 (on 31-March-2014)

Websitewww.axisbank.com

Balance Sheet of Axis Bank

Mar '14

Particulars in Rs. Cr.

Capital And Liabilities:

Total Share Capital469.84

Equity Share Capital469.84

Preference Share Capital0

Reserves37,750.64

Net Worth38,220.48

Deposits280,944.56

Borrowings50,290.94

Total Debt331,235.50

Other Liabilities & Provisions13,788.89

Total Liabilities383,244.87

Assets:

Cash & Balances With RBI17,041.32

Balance With Banks, Money At Call11,197.38

Advances230,066.76

Investments113,548.43

Gross Block2,310.54

Accumulated Depreciation0

Net Block2,310.54

Capital Work In Progress99.67

Other Assets8,980.79

Total Assets383,244.89

Book Value (Rs)813.47

Mar '14

ParticularsIn Rs. Cr.

Income

Interest Earned30,641.16

Other Income7,405.22

Total Income38,046.38

Expenditure

Interest Expended18,689.52

Employee Cost2,601.35

Selling And Admin Expenses0

Depreciation363.93

Miscellaneous Expenses10,173.91

Preoperative Exp Capitalised0

Operating Expenses7,900.77

Provisions & Contingencies5,238.42

Total Expenses31,828.71

Net Profit For The Year6,217.67

Extra ordionary Items0

Profit Brought Forward10,029.26

Total16,246.93

Preference Dividend0

Equity Dividend939.69

Corporate Dividend Tax161.44

Per Share Data (Annualised)

Earning Per Share (Rs)132.33

Equity Dividend (%)200


Appropriations

Transfer To Statutory Reserves1,644.36

Transfer To Other Reserves-0.01

Proposed Dividend/Transfer To Govt1,101.13

Balance C/F To Balance Sheet13,501.45

Total16,246.93

Profit & Loss Account of Axis Bank


To be customer driven best managed enterprise that enjoys market leadership in providing housing related finance.

TypePublic

Traded asBSE:500180NSE:HDFCBANKBSE SENSEX Constituent


FoundedAugust 1994

HeadquartersMumbai,Maharashtra,India

Area servedWorldwide

Key peopleAditya Puri(MD)

ProductsCredit cards,consumer banking,corporate banking,finance and insurance,investment banking,mortgage loans,private banking,private equity,wealth management

RevenueUS$6.5 billion (March 2013)

Employees69,065 (March 2013)

WebsiteHDFCBank.com

Balance Sheet of HDFC BankMar '14

ParticularsIn Rs. Cr.

Capital And Liabilities:



Share Application Money0


Reserves42,998.82

Revaluation Reserves0

Net Worth43,478.63

Deposits367,337.48

Borrowings39,438.99




Assets

Cash & Balances With Rbi25,345.63

Balance With Banks, Money At Call14,238.01

Advances303,000.27


Gross Block2,939.92


Net Block2,939.92

Capital Work In Progress0




Profit & Loss account of HDFC BankParticulars in Rs. Cr.

Income




Expenditure

Interest expended22,652.90


Selling and Admin Expenses0

Depreciation671.61






Net Profit for the Year8,478.38

Extraordionary Items0

Profit brought forward11,132.18

Total19,610.56


Equity Dividend1,643.35


Per share data (annualised)




Appropriations

Transfer to Statutory Reserves2,185.93

Transfer to Other Reserves847.84

Proposed Dividend/Transfer to Govt1,922.64

Balance c/f to Balance Sheet14,654.15

Total19,610.56


To be the leading provider of financial services in India and a major global bank

TypePublic company

Traded asBSE:532174NSE:ICICIBANKBSE SENSEX Constituent


Founded1954

HeadquartersMumbai, India


Key peopleK.V. Kamath(Chairman)Ms.Chanda Kochhar(MD & CEO)

ProductsCredit cards,Consumer banking,corporate banking,finance and insurance,investment banking,mortgage loans,private banking,wealth management

RevenueUS$ 13.52 billion (2012)

Employees81,254 (2012)

Websitewww.icicibank.com

Balance Sheet of ICICI BankMar '14

Particularin Rs. Cr.

Capital and Liabilities:

Total Share Capital1,155.04

Equity Share Capital1,155.04

Share Application Money6.57


Reserves72,051.71


Net Worth73,213.32

Deposits331,913.66

Borrowings154,759.05




Assets

Cash & Balances with RBI21,821.83

Balance with Banks, Money at Call19,707.77

Advances338,702.65


Gross Block4,678.14


Net Block4,678.14

Capital Work In Progress0




Profit & Loss account of ICICI BankMar '14

Particularsin Rs. Cr.

Income




Expenditure

Interest expended27,702.59



Depreciation575.97






Net Profit for the Year9,810.48

Extraordionary Items0

Profit brought forward9,902.29

Total19,712.77








Appropriations

Transfer to Statutory Reserves3,506.65

Transfer to Other Reserves0

Proposed Dividend/Transfer to Govt2,887.53

Balance c/f to Balance Sheet13,318.59

Total19,712.77

FUNDAMENTAL ANALYSISRatio analysis for 2014

ParticularsAxis BankHDFC BankICICI Bank

No.Of Equity Shares( in cr.)46.984239.905115.504

Face Value10210

MPS (6-June-2014)1974814.951481.75

Earnings Per Share132.3435.3484.94

Interpretation

It shows how much of a company's profit is allotted to the Companies outstanding stocks. It can be used as one of the comparison tools for picking up the stock for investment. From investor point Axis Bank seems to better than ICICI and HDFC as its EPS is considerably high


Dividend Per Share206.8523

Dividend (% increase)1125.4515

Interpretation

Dividends are a form of profit distribution to the shareholder. All the three banks have a growing dividend per share which can be a sign that the Bank's management believes that the growth can be sustained. But we can say that HDFC bank as compared to others has a higher percentage increase in dividend, this would attract the investors to invest. Although this doesnt provide an overall outlook on a company as some companies retain their earnings for growth instead of paying dividends.

Particulars ( in %)Axis BankHDFC BankICICI Bank

Advance/Deposit Ratio81.8982.49102.05

Investment/Deposit Ratio40.4232.9353.33

Cash/Deposit Ratio3.9910.7812.51

Interpretation

Advances are necessary to earn profit and service the interest being paid to the deposits.Investment deposit ratio basically gives information that where bank is using there deposit i.e. in development , economy wealth and many other sector where bank can put their money for investment so that Bank earn more interest .Cash being liquid of all the assets gives the direct picture of the liquidity of the bank. But large volume of the cash in the system is harmful for the profit of the bank. So, from the above chart we can infer that: Advances to deposit ratio of axis banks and HDFC Bank as compared to ICIC Bank shows that ICICI Bank has given large amount of advances with respect to their deposits. Investment to deposit ratio of axis banks and HDFC Bank as compared to ICIC Bank shows that it has invested large amount of their deposits in various sectors. On an average Banks in India maintains ?? % cash in hand to the deposit that they have.


Interest Expended/Interest Earned Ratio 60.9955.0762.71

Other Income/Total Income19.4616.1419.10

Interpretation

Interest expended to interest earned ratio represents the expenses over the earnings. The above chart shows all the three banks have more than 50% expenses. It means expenses are more than the earnings, which is not a good indicator. But relatively HDFC Bank has a better expense - income ratio. Other income/Total income ratio represents how much income of the bank is coming from other than interest income. The chart shows that HDFC Bank relatively has low % of income from other Income.


Interest Expended/Total Funds4.885.034.95

Interest Income/Total Funds3.124.102.94

Non-Interest Income/Total Funds1.931.761.86

Net Profit/Total Funds1.621.881.75

Interpretation

The core activity of any bank is to provide credit, on which it earns interest. Thus interest income is the most important income for any bank. Indian banks diversifying their operation in many fields, yet interest income is one the major source of their revenue. The interest income holds 70 to 80 percent weightage in nearly all banks total income. The chart above shows: Represents the Interest income, non- Interest income, Interest expenses and net profit over total funds. Interest Income is more than the Interest expended for all three Banks. has a relatively less income from interest.


Return on Net Worth [RONW]16.2719.5013.40

Interpretation

The return on equity ratio (also known as the return on net worth) reveals the amount of return earned by investors on their investments in a business. This return can be improved by using more debt and less equity to fund its operations. But use of too much of debt also may lead to financial problems in the business.The above Chart shows that HDFC Bank has a Relatively higher Return on Net worth. Having higher Return on equity presents a picture of a well-run business. Banks should focus on this as it would attract the investors to invest in the Shares of HDFC Bank


Earning Retention Ratio0.850.810.73

Dividend Payout Ratio0.150.190.27

Sustainable growth rate (in %)13.8115.729.77

Interpretation

The dividend payout ratio is the amount of dividends paid to stockholders relative to the amount of total net income of a company. The amount that is not paid out in dividends to stockholders is held by the company for growth. The amount that is kept by the company is called retained earnings. The above chart shows that ICICI Bank is able to give better returns to the shareholders as compared to others.Sustainable growth raterepresents how quickly a company can expand using only its own sources of funding.From the above charts we can say that even though ICICI Bank is able to provide better returns to its shareholder, relatively HDFC Bank is able to better sustain its growth rate with its own retained earnings.


Price earnings Ratio14.9223.0617.45

Report CardPE Ratios 14.62EPS (Rs.)132.34Sales (Rs. Cr)7,965.23Face Value (Rs.)10Net ProfitMargin (%)16.34Last BonusLast Dividend(%)200Return onAverage Equity 16.26Report CardPE Ratios23.71EPS (Rs.)35.34Sales (Rs. Cr)10,788.56Face Value (Rs.)2Net ProfitMargin (%)17.28Last BonusLast Dividend(%)342.5Return onAverage Equity19.5

Report CardPE Ratios17.10EPS (Rs.)84.94Sales (Rs. Cr)11,489.25Face Value (Rs.)10Net ProfitMargin (%)17.96Last BonusLast Dividend(%)230Return onAverage Equity13.4

Interpretation

It is a valuation ratio of a company's current share price compared to its per share earnings Here we can see that HDFC bank has higher P/E ratio as compared to ICICI bank and Axis Bank A high P/E value suggests that investors are expecting higher earnings growth in the future compared to companies with lower P/E

Overview of Indian IT SectorThe power of Information Technology (IT) enables two-way communication between consumers and the enterprise. Improved IT infrastructure like ATMs and online payments have done away with the troublesof carrying big chunks of cash in your pocket while travelling.So, what exactly does IT cover? Anything involved with software, computers, networks, intranets, Web sites, servers, databases and telecommunications falls under the roof of IT. IT is the technology that helps companies store, process and flow data within an organization. This sector ultimately serves other sectors like Banking, Manufacturing, Telecom, Hotels, Hospitals etc. to improve their efficiency and increase their revenues via customer satisfaction.The Indian Information Technology (IT) and Information Technology enabled Services (ITeS) sectors go hand-in-hand in every aspect. The industry has not only transformed Indias image on the global platform, but also fuelled economic growth by energizing higher education sector (especially in engineering and computer science). The industry has employed almost 10 million Indians and hence, has contributed a lot to social transformation in the country.Furthermore, Indian firms, across all other sectors, largely depend on the IT & ITeS service providers to make their business processes efficient and streamlined. Indian manufacturing sector has the highest IT spending followed by automotive, chemicals and consumer products industries.Indian organisations are turning to IT to help them grow business in the current economic environment.

Market SizeIndia's IT-business process outsourcing (BPO) industry revenue is expected to cross US$ 225 billion mark by 2020, according to a Confederation of Indian Industry (CII) report, titled 'The SMAC Code-Embracing New Technologies for Future Business'.India has become world's second-largest online community after China with 213 million internet users by December 2013 and 243 million by June 2014, according to a report by Internet and Mobile Association of India (IAMAI) and IMRB International.Indias total IT industrys (including hardware) share in the global market stands at 7 per cent; in the IT segment the share is 4 per cent while in the ITeS space the share is 2 per cent. India's IT and BPO sector exports grew by 12-14 per cent in FY14 to touch US$ 84 billion - US$ 87 billion, according to Nasscom.Moreover, India plans to spend around US$ 3.9 billion on cloud services during 2013-2017, of which US$ 1.7 billion will be spent on software-as-a-service (SaaS), according the latest outlook of IT research and advisory company, Gartner Inc.Mumbai with 12 million internet users has emerged as the top most city in the country with highest penetration of internet users, followed by Delhi (8.1 million) and Hyderabad (4.7 million), according to the data released by Internet & Mobile Association of India (IAMAI).

Segmentation for IT and ITeS Sectors

1. IT- Software These companies help in developing and implementation of different software for their clients worldwide. These softwares could be for documentation, security services, banking softwares etc.

2. ITeS Business process outsourcing (BPO) Major Corporations across the world outsources their back-office operations to some companies. E.g. Employee payroll for a ABC companys global workforce is maintained by an Indian BPO. Slowly the definition is expanding to Human resources, accounting, logistics, legal processes etc.

3. IT- Hardware -The stuff you can actually see and touch, and would likely break if you threw it out a fifth-story window, is hardware. This would include laptops, desktops, Storage devices, Networking devices, LCD, printers etc.4. IT- Education:This segment provides training for employment in the other segments. This would include companies providing various certification courses, like Java, Oracle etc. These companies also provide training for employees in corporate sector. Recently, some companies have also expanded this service to cater to schools and colleges.

History and Evolution of IT Industry The evolution of IT industry can be studied in 4 phases:

Phase I: Prior to 1980 The software industry was literally nonexistent in India until 1960. Software used in the computers till that time, were in built with the systems. Government protected the hardware industry through high tariff barriers and licensing. However, in the West, the need for software development was gradually being felt as the software in built in the system was not sufficient to perform all the operations. The Government of India therefore, realized the potential for earning foreign exchange. In 1972, the government formulated the Software Export Scheme. This scheme made the provision of hardware imports in exchange of software exports. TCS became the first firm to agree to this condition. The year 1974 marked the beginning of Software exports from India. Phase II: 1980- 1990 Despite the government initiatives, the software exports were not picking up because of two reasons mainly: The exports of software, was heavily dependent on the imports of hardware, which was costly as well as the procedure for obtaining the same was very cumbersome. Secondly, there was a lack of infrastructural facilities for software development. To counter these, the government formulated a New Computer Policy in 1984, which simplified import procedures and also reduced the import duty on hardware for software developers. In an attempt to make, software industry independent of the hardware industry, the government in 1986, formulated Software Policy which further, liberalized the IT industry. According to this policy, the hardware imports were de-licensed and were also made duty free for the exporters. This along with the world wide crash in the hardware prices reduced the entry barriers substantially. In 1990, government established Software Technology Parks of India. This scheme was formulated to increase the exports of software and services.

Phase III: 1990- 2000 This decade made several significant changes in the economy, including trade liberalization, opening up of Indian economy to foreign investment, devaluation of the rupee and relaxation of entry barriers. These changes attracted many foreign entities (MNCs) to our nation. These MNCs in India, introduced Offshore Model for software services, according to which, the companies used to service their clients from India itself. This model further graduated to Global Delivery Model (GDM). Global Delivery Model is a combination of Onsite and Offshore Model. In this model, the Offshore Development Centre is located at various locations across the globe. During this period due to the entry of many players in the Indian market, the competition got intensified. Therefore, the players started investing in research and development to distinguish their services from others. Phase IV: Post 2000 The global problems like the Y2K, the dotcom crash and recession in the US economy, proved to be a boon to Indian IT industry. The Y2K problem demanded the existing softwares to be compatible to the year 2000. Due to the shortage of US based programmers during this period, many mid-sized firms were forced to utilize the services of Indian firms. This had placed the Indian IT industry on the global map. Post 2002- 03, the industry had registered a robust growth rate because of increase in the number of clients, large sized contracts and a strong global delivery model.

TOP PLAYERS IN INDIAN IT SECTORThis sector has made significant contributions to Indias economic growth in terms of GDP increase, foreign exchange earnings as well as employment generation. Its contribution to GDP has increased tenfold in last decade, from 0.6% to 6% till 2009-10. The sector has helped India transform from a rural and agriculture-based economy to a knowledge-based economy. Besides this, the lives of people have been positively influenced by direct or indirect contribution of IT sector to various parameters such as employment, standard of living, per-capita income etc.TOP PLAYERS IN THEINDIAN IT INDUTRY

SegmentTop Players

IT- SoftwareInfosys, TCS, Wipro, HCL Tech.

ITeS- BPOEclerx Services, iSmart Global, 3i Infotech

IT HardwareHCL infosystem, Zenith Computers, Smartlink Networking

IT EducationAptech, NIIT, Educomp Solution

In India, the IT Software segment has seen significant growth and has put India on the global map. It contributes for almost 75% of the total revenues of the IT sector. Though Hardware enjoys second place in terms of market share in India, it is quite low as compared to global benchmark. The BPO segment has grown well and is expected to make a footprint in the IT Sector.The software sector is service-oriented and thus the products offered are tailored to the requirement of its client. Hence, major input costs are those of human resources (forming almost 40% of the total costs) and research and development. Companies understand the requirements of clients and the product is developed accordingly.In the last ten years the IT sector in India has grown at an average annual rate of 28%. India has emerged as the preferred destination for IT services owing to the cost advantage and talent pool.

Indiaaccounts for almost 51% of the global sourcing market. Exports contribute around 75% of the total revenue of the IT sector in India. However due to increase export-orientation and lesser domestic consumption the sector suffered major hit in the recession that shook the globe in 2008-09. In the year 2010, different economies began seeing recovery, but at varying pace. Indian companies have subsequently begun tapping other geographical markets and domestic consumption has also relatively increased.

InvestmentsIndian IT's core competencies and strengths have placed it on the international canvas, attracting investments from major countries.According to data released by the Department of Industrial Policy and Promotion (DIPP), the computer software and hardware sector has attracted foreign direct investment (FDI) worth Rs 54,347.88 crore (US$ 8.77 billion) between April 2000 and September 2013.Some of the major investments in Indian IT and ITeS sector: Wipro plans to acquire US-based mortgage due diligence and risk management service provider Opus Capital Markets Consultants (Opus CMC) for Rs 465 crore (US$ 75.07 million). Opus CMC provides comprehensive risk management solutions to the mortgage industry in the US. Infosys has opened a new centre in Sydney, Australia. This is its fourth development centre in Australia and has a capacity to seat 140 employees. Further, the company plans to hire 85 people in the region. Hitachi has acquired a foothold in India's payment space with the acquisition of Prizm Payment Services. The firm has entered into share transfer agreements with Prizm shareholders, including Winvest Holdings (India), Sequoia Capital and Axis Bank. Dell has opened its India design centre for its storage technologies and has realigned its domestic research and development (R&D) unit. The facility will focus on developing software, integrating aspects involving back-up of emails and related storage. Tata Consultancy Services (TCS) has launched a software development facility in Ahmedabad, Gujarat. The facility will serve global customers across industry segments. Cognizant Technology Solutions has acquired ValueSource, a subsidiary of KBC Group, a Belgium-based multi-channel bank insurance group. Schneider Electric has commissioned a services bureau in Bengaluru as a nerve centre and a support facility for data centres in India and the Asia-Pacific region.

Government InitiativesIT spending by the Government of India is projected to reach US$ 6.4 billion in 2013, a growth of 7 per cent year-on-year, according to a report by Gartner.Some of the major initiatives taken by the Government to promote IT and ITeS sector in India are: After a successful first-ever international delegation to Dubai, Gujarat-based small and medium enterprises (SMEs) in the IT sector plan to send similar business delegations to European and South East Asian countries. The Government of Karnataka plans to announce a new information technology (IT) policy to boost investments in states tier-II and tier-III cities. The policy would enable the sector to employ about two million people in the state directly by 2020. The Government of India has fast tracked the process of setting up of centres of National Institute of Electronics and Information Technology (NIELIT) in Northeast India. The Government of Brazil has liberalised the issue of short term work visas, a move which will make it easier for Indian IT professionals to take up assignments in Brazil. India and Vietnam have signed two memorandums of understanding (MoU) for partnership in the field of information, communications and technology (ICT).

Road AheadGlobalisation has a profound impact in shaping the Indian IT industry over the years with India capturing a sizeable chunk of the global market for technology sourcing and business services. Over the years the growth drivers for this sector have been the verticals of manufacturing, telecommunication, insurance, banking, finance and of late the fledgling retail revolution. As the new scenario unfolds it is getting clear that the future growth of IT and ITeS will be fuelled by the verticals of climate change, mobile applications, healthcare, energy efficiency and sustainable energy. Traditional business strongholds would make way for new geographies, there would be new customers and more and more of SMEs will go for IT application and services.Demand from emerging countries is expected to show strong growth going forward. Tax holidays are also extended to IT sector for software technology parks of India (STPI) and special economic zones (SEZs). Further, the country is providing procedural ease and single window clearance for setting up facilities. The countrys cost competitiveness in providing IT services, which is approximately 3-4 times cheaper than the US continues to be its USP in the global sourcing market.

Advantages India Offers for IT Companies

Since the Government of India liberalized the IT and telecommunications sector in the late 1990s, it has provided the right impetus to companies working in this sector. India can emerge as the clear industrial leader in the near future, if it maintains due diligenceToday, India has one of the most robust and fastest growing economies. The recent recession witnessed in the developed nation, and the Dubai economic crisis have had very little effect on its growth in the IT and the industrial sectors. India offers high quality IT and IT-enabled Services at low cost, using state-of-the-art technology. Convergence has led to lowering of tariffs, plentiful availability of bandwidth at increasingly lower cost, competition and growth in technology, especially fiber optics and wireless technology. Indias Information and Communications Technology (ICT) organizations are counted among the best known and most reputed ICT solutions and services providers worldwide. Scores of global ICT leaders have invested in India, making the country their hub for software development, offshore outsourcing and R&D. India has an investor friendly environment. To encourage the growth of the IT sector in India, the government too has lowered the entry barriers. FDI can be made in most sectors through the automatic route.India has a proven track record as a world-class software development centre. IT companies in India generate about 75 per cent of their total revenue from offshore developmentBenefits of Outsourcing to India Skilled and inexpensive IT resources A booming software industry, backed by government initiatives Helpful initiatives like rationalization of taxes, IT friendly budgets aimed at promoting investment Availability of English speaking workforce Concrete steps to upgrade the IT infrastructure of India The role played by academic institutes that promotes research and innovation A stable democracy based on the parliamentary system of governance. Highly developed banking network and financial services.PORTERS 5 FORCE ANALYSIS FOR IT SECTOR

1) Power of Buyers : The Indian IT Sector has a large number of players and few entry barriers for new entrants. Thus, the buyer has many options to choose from and can clearly articulate their needs. However, the bigger companies also enjoy the advantage of switching costs. It means that once a particular client selects a particular company as its partner, it becomes dependent on that company for all its upgrades and technology requirements, making it difficult for the client to switch. Thus, the buyers have a MEDIUM bargaining leverage.

2) Power of suppliers: Knowledgeable human resource is the largest requirement for it sector. Large supply of this human resource, at low cost is available from around the world. Also, a lot of matured education and training is easily available. As there exist many competitive suppliers in the market the supplier has very LOW or NO power in the IT sector.

3) Competitive rivalry : No huge capital investment is required to start a new company, leading to very large number of small and medium size companies. It is becoming increasingly difficult for players to differentiate, which has led to decrease in margins. However, a few top and niche players still enjoy pricing power. Thus, the competition in the sector is HIGH.

4) Availability of substitutes : Certain countries e.g. China,Korea, Taiwan, Israel have started to develop an environment required for growth of IT sector and are emerging as suppliers of these products and services. Indian companies need to continuously innovate to have an edge others. Thus, the availability of substitutes is MEDIUM.5) Threat of new entrant : Set up cost is almost negligible. Further the government policies also promote the entrepreneurs by providing benefits in terms of tax holidays and building software technology parks. Apart from this there are many venture capitalists that are ready to fund new start-ups enabling them to scale up with increased demand and higher margins the threat of new entrant is HIGH.

COMPANY PROFILEPOWERED BY INTELLECT DRIVEN BY VALUESTypePublic

Traded asBSE:500209NSE:INFYBSE SENSEX Constituent

IndustryIT services,IT consulting

Founded1981

HeadquartersElectronics City,Bangalore,Karnataka,India


Key peopleN. R. Narayana Murthy(Executive Chairman)Vishal Sikka(CEO&MD)S. Gopalakrishnan(Executive Vice Chairman)

ServicesIT,business consultingandoutsourcing services

RevenueINR 50,133 crores (US$8.4 billion) (2014)[1]

Employees160,405 (31 March 2014)[2]

DivisionsInfosys BPOLodestone Management Consultants

Websiteinfosys.com

Balance Sheet of InfosysMar '14

in Rs. Cr.

Sources Of Funds

Total Share Capital286

Equity Share Capital286



Reserves41,806.00


Networth42,092.00

Secured Loans0

Unsecured Loans0

Total Debt0


Application Of Funds

Gross Block10,374.00

Less: Accum. Depreciation4,642.00

Net Block5,732.00

Capital Work in Progress954

Investments6,717.00

Inventories0

Sundry Debtors7,336.00

Cash and Bank Balance24,100.00

Total Current Assets31,436.00

Loans and Advances7,873.00

Fixed Deposits0

Total CA, Loans & Advances39,309.00

Deffered Credit0

Current Liabilities4,503.00

Provisions6,117.00

Total CL & Provisions10,620.00

Net Current Assets28,689.00

Miscellaneous Expenses0


Contingent Liabilities 1,020.00


Profit & Loss account of InfosysMar '14


Income

Sales Turnover44,341.00

Excise Duty0

Net Sales44,341.00


Stock Adjustments0


Expenditure

Raw Materials0

Power & Fuel Cost0


Other Manufacturing Expenses3,990.00





Operating Profit12,527.00

PBDIT15,103.00

Interest0

PBDT15,103.00

Depreciation1,101.00

Other Written Off0

Profit Before Tax14,002.00

Extra-ordinary items0

PBT (Post Extra-ord Items)14,002.00

Tax3,808.00

Reported Net Profit10,194.00

Total Value Addition31,814.00



Corporate Dividend Tax615


Shares in issue (lakhs)5,714.03


Equity Dividend (%)1,260.00


COMPANY PROFILETypePublic

Traded asBSE:532540NSE:TCSBSE SENSEX Constituent


Founded1968

Founder(s)J.R.D Tata

HeadquartersMumbai, India


Key peopleNatarajan Chandrasekaran(CEO & Managing Director)

ServicesIT,business consultingandoutsourcingservices

RevenueUS$ 13.44 billion (FY 2013-14)


ParentTata Group

SubsidiariesCMC Limited,TCS China,TRDDC,Computational Research Laboratories, TCS e-Serve Ltd.

Websitewww.tcs.com

Balance Sheet of Tata Consultancy ServicesMar '14


Sources Of Funds





Reserves43,856.01


Networth44,051.88

Secured Loans88.64

Unsecured Loans1.05

Total Debt89.69


Application Of Funds

Gross Block11,220.11

Less: Accum. Depreciation5,290.92

Net Block5,929.19

Capital Work in Progress3,047.53

Investments5,832.42

Inventories8.57

Sundry Debtors14,471.89

Cash and Bank Balance12,566.26

Total Current Assets27,046.72

Loans and Advances15,748.33

Fixed Deposits0

Total CA, Loans & Advances42,795.05

Deffered Credit0

Current Liabilities7,355.18

Provisions6,107.44

Total CL & Provisions13,462.62

Net Current Assets29,332.43

Miscellaneous Expenses0


Contingent Liabilities 10,880.43


Profit & Loss account of Tata Consultancy Services

Mar '14


Income

Sales Turnover64,672.93

Excise Duty0

Net Sales64,672.93


Stock Adjustments0


Expenditure

Raw Materials0.02

Power & Fuel Cost0


Other Manufacturing Expenses0





Operating Profit21,533.72

PBDIT24,648.43

Interest23.41

PBDT24,625.02

Depreciation1,080.55

Other Written Off0

Profit Before Tax23,544.47

Extra-ordinary items0

PBT (Post Extra-ord Items)23,544.47

Tax5,069.55

Reported Net Profit18,474.92

Total Value Addition43,139.19

Preference Dividend28.76




Shares in issue (lakhs)19,587.28


Equity Dividend (%)3,200.00


COMPANY PROFILE"Applying Thought"TypePublic

Traded asBSE:507685NSE:WIPROBSE SENSEX Constituent


FoundedMumbai,Maharashtra(in 1945)

Founder(s)M.H. Premji

HeadquartersIndia


Key peopleAzim Premji(Chairman)T K Kurien(CEO)

ServicesIT,business consultingandoutsourcing services

Revenue437.6 billion (US$7.3 billion) (2013-14)


Websitewww.wipro.com

BALANCE SHEET OF WIPRO LTD.Mar ' 14


Sources of funds

Owner's fund

Equity share capital493.2

Share application money-

Preference share capital-

Reserves & surplus28,862.70

Loan funds

Secured loans106

Unsecured loans4,404.30

Total33,866.20

Uses of funds

Fixed assets

Gross block9,034.60

Less : revaluation reserve-

Less : accumulated depreciation5,059.60

Net block3,975.00

Capital work-in-progress275.1


Net current assets

Current assets, loans & advances30,450.80

Less : current liabilities & provisions11,870.70

Total net current assets18,580.10

Miscellaneous expenses not written-

Total33,866.20

Book value of unquoted investments14,431.40

Market value of quoted investments1,825.70

Contingent liabilities7,081.70

PROFIT AND LOSS A/C OF WIPRO LTD.Mar ' 14


Income

Operating income38,757.20

Expenses

Material consumed2,549.40

Manufacturing expenses246.8

Personnel expenses18,337.50

Adminstrative expenses8,515.10

Cost of sales29,648.80

Operating profit9,108.40

Other recurring income1,611.20

PBDIT10,719.60

Financial expenses374.7

Depreciation736.7

PBT9,608.20

Tax charges2,220.80

PAT7,387.40

Other non cash adjustments-

Reported net profit7,387.40

Earnigs before appropriation15,224.50

Equity dividend1,638.30

Preference dividend-

Dividend tax335.3

Retained earnings13,250.90

Indian RupeeThe Indian Rupee decreased to 59.77 in July from 60.06 in June of 2014. Indian Rupee averaged 32.86 from 1973 until 2014, reaching an all time high of 68.61 in September of 2013 and a record low of 7.19 in March of 1973.

ActualPreviousHighestLowestDatesUnitFrequency

59.7760.0668.617.191973 - 2014Daily

The USDINR spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the INR. While the USDINR spot exchange rate is quoted and exchanged in the same day, the USDINR forward rate is quoted today but for delivery and payment on a specific future date. This page provides - Indian Rupee - actual values, historical data, forecast, chart, statistics, economic calendar and news.

MarketsLastPreviousHighestLowestUnit

Currency59.7760.0668.617.19

FINDINGSFrom the Economic analysis, Industry analysis and the ratio analysis of companies viz. Banking sector Axis Bank, HDFC Bank ICICI Bank

IT Sector TCS, Infosys Wiprofollowingfindingshave been given:

The economic analysis aims at determining if the economic climate is conclusive and is capable of encouraging the growth of business sector, especially the capital market. When the economy expands, most industry groups and companies are expected to benefit and grow. When the economy declines, most sectors and companies usually face survival problems. Hence, to predict share prices, an investor has to spend time exploring the forces operating in overall economy. Exploring the global economy is essential in an international investment setting. The selection of country for investment has to focus itself to examination of a national economic scenario. It is important to predict the direction of the national economy because economic activity affects corporate profits, not necessarily through tax policies but also through foreign policies and administrative procedures.By analyzing the current trend of Indian Economy and Industry I have found that being a developing economy there is lot of scope for growth and this industry still has to cross many levels so there are huge opportunities to invest. Increase in income level, increase in consumer demand, technology development, globalization, foreign investments are few of the opportunities which the industry has to explore for developing the economy.Gross Domestic Product (GDP):GDP indicates the rate of growth of the economy. It represents the aggregate value of the goods and services produced in the economy. It consists of personal consumption expenditure, gross private domestic investment and government expenditure on goods and services and net exports of goods and services. The growth rate of economy points out the prospects for the industrial sector and the return investors can expect from investment in shares. The higher growth rate is more favorable to the stock market.

Savings and investment:It is obvious that growth requires investment which in turn requires substantial amount of domestic savings. Stock market is a channel through which the savings are made available to the corporate bodies. Savings are distributed over various assets like equity shares, deposits, mutual funds, real estate and bullion. The savings and investment patterns of the public affect the stock to a great extent.

Inflation:Along with the growth of GDP, if the inflation rate also increases, then the realgrowth wouldbeverylittle.Theeffectsofinflationoncapital marketsare numerous. Anincrease inthe expected rate of inflationis expected to cause anominal rise in interest rates. Also, it increases uncertainty of future business and investmentdecisions.Asinflationincreases,itresultsinextracoststobusinesses,therebysqueezing their profit margins and leadingto real declines in profitability.Interest rates:The interest rate affects the cost of financing to the firms. A decrease in interest rate implies lower cost of finance for firms and more profitability. More money is available at a lower interest rate for the brokers who are doing business withborrowed money. Availability of cheap funds encourages speculation and rise in theprice of shares.As the economy recovers, investment demand and the need for credit will pick up. To the extent that this contributes eventually to supply, it is important that banks have the room to finance it. A reduction in the required SLR will give banks more freedom to expand credit to the non-Government sector. However, the Reserve Bank is also cognizant of the significant on-going financing needs of the Government. Therefore, the SLR is reduced by 0.50 per cent of NDTL.

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