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Report On Fundamental and Technical Analysis of ICICI BANK SHARE
Report On Fundamental and Technical Analysis of ICICI BANK SHARE
Recommendation
Of
ICICI BANK
Submitted to Submitted by
Prof .Sridevi Rammohan Atmakuri
ACKNOWLEDGEMENT
Nothing can be gained or acquired without hard work which leads to success.
The success of my work is the amalgamation of my hard work, my knowledge and
pain.
We deeply grateful to my Prof SRI DEVI, who graciously spared her time to
share her views and who‟s unstinted support and cooperation enabled this project
to see the light of the day. We were thankful and immensely obliged for her
constant guidance and words of inspiration
For completion of our project we thankful to our in formats that provided us with
required inputs and information which are the requisites of my project.
Above all we have no words to express my gratitude to the almighty GOD who
blessed us the wisdom and enlightened us to complete this project.
Last but not the least, I specially wish all my friends a vote of thanks as without
their valuable supports this report would have not been possible
BSE NSE
CODE 532174
ISIN Demat INE090A01013 INE090A01013
52 HIGH 1173.65 1170.00
52 LOW 804.40 712.00
MARKET CAP 1293364.96
VOLUME 172687 2198705
Analysis
Fundamental Analysis
A method of evaluating a security that entails attempting to measure its intrinsic value by
examining related economic, financial and other qualitative and quantitative
factors. Fundamental analysts attempt to study everything that can affect the security's value,
including macroeconomic factors (like the overall economy and industry
conditions) and company-specific factors (like financial condition and management).
The end goal of performing fundamental analysis is to produce a value that an investor can
compare with the security's current price, with the aim of figuring out what sort of position to
take with that security (underpriced=buy, overpriced= sell or short).
Economic analysis
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.
India's economy expanded 8.8% in the second quarter from a year earlier, compared to an 8.6%
on-year expansion in the first, lifted by robust activity in manufacturing. Agricultural output
along with strong development in the Industrial, Mining and banking sector have helped to boost
the Indian economy. Agricultural output raised 2.8 per cent y-o-y thanks to improved harvests.
Industrial production increased by 12% and in the mining sector by 9%. According to 2010 data
the shares of banking sector value add in GDP has been increased 7.7% from 2.5%.The
forecasters have assigned highest 29.6 per cent chance that it will fall in 6.0-6.9 per cent in 2010-
11. They raised their forecasts slightly for agriculture growth to 4.0 percent from 3.5 percent, for
industry to 9.0 percent from 8.1 percent and for services it was steady at 9.0 percent. The
survey showed the economists expect GDP growth in the April-June quarter to be 8.1 percent up
from 7.9 percent in the last survey. For the July-September quarter, GDP growth is placed at
8.3 percent. The Reserve Bank of India has stated that it had seen an annual growth of 8.5%
steadily. The main priority of the Reserve Bank is to curb the ongoing inflation, which peaked at
11% last month. Interest rates have been increased by the banks to contain the inflation, but it
could slow down the growth of the Indian economy in the coming months. But even thought
there has been a rise in the interest rates there hasn‟t been much change in the distribution of
loans, the Indian customer is hardly affected with the hiked interest rates.
Almost every sector of the economy is poised to grow faster and a 9 per cent growth in 2010-11
is not difficult if domestic policies and external factors do not come in the way.
Expert expects that India s economy to grow by 8.1% in 2010 based on a steep gain in industrial
output and resurgent private consumption investment and exports. Were these scenarios to
continue growth would lift further to 8.3% in 2011 said Chief Economist. They also expect the
Reserve Bank of India (RBI) to continue gradually raising interest rates and to keep a tight
leash on liquidity to tame inflation. Recently RBI changed the repo rate from 5.75% to 6%
and reverse repo rate 4.5% to 5%. CRR rate they keeping unchanged. This the six time I a
year they revise key parameter to control inflation.
GDP IN US$
1.6E+12
1.4E+12
1.2E+12
1E+12
8E+11
6E+11
4E+11
2E+11
0
yr 2001 yr 2002 yr 2003 yr 2004 yr 2005 yr 2006 yr 2007 yr 2008 yr 2009 yr 2010
4000
3000
2000
1000
0
37335
38111
38882
39658
36892
37004
37111
37224
37446
37558
37670
37782
37889
37998
38217
38328
38439
38545
38657
38770
38988
39100
39217
39324
39433
39546
39772
39890
40004
40116
40231
40343
Above Graphs are GDP and S&P CNX NIFTY of past 10 years from 2001 to 2010
From above Graphs, we find that GDP of India and S&P CNX NIFTY moves in same direction.
They have Strong Positive Correlation between them.
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 percent will tend to influence the purchasing power of the nation.
In other words, 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.
In 2010 favorable monsoons (the rains that fall from June to September) should lead to strong farm
production which will help drive economic recovery and bring down food inflation. While inflation
remains a concern economists expect it will recede in coming months. In our opinion CPI inflation should
continue to recede from current double digits as food inflation comes down on the back of improved farm
output and as the RBI s tightening measures tame nonfood inflation he said. Resurgent exports and capital
inflows add to the positive story.
From the Above charts, I found Inflation and Nifty are moving in same direction and they
are Moderately correlated.
The Indian banking system is financially stable and resilient to the shocks that may arise due to
higher non-performing assets (NPAs) and the global economic crisis, according to a stress test
done by the Reserve Bank of India (RBI).
Globalization and liberalization of the Indian economy, and the interest of foreign banks to
expand their presence in India through the inorganic route, have fuelled the growth of the
banking industry.
The banking penetration calculated on the basis of total number of credit accounts to total
population was 9.4 per thousand in 2007–08.
Significantly, the RBI has the tenth largest gold reserves in the world after spending US$ 6.7
billion towards the purchase of 200 metric tons of gold from the International Monetary Fund
(IMF) in November 2009. The purchase has increased the country's share of gold holdings in its
foreign exchange reserves from approximately 4 per cent to about 6 per cent.
In the annual international ranking conducted by UK-based Brand Finance Plc, 20 Indian banks
have been included in the Brand Finance® Global Banking 500. In fact, the State Bank of India
(SBI) has become the first Indian bank to be ranked among the Top 50 banks in the world,
capturing the 36th rank, as per the Brand Finance study. The brand value of SBI increased from
US$ 1.5 billion in 2009 to US$ 4.6 billion in 2010. ICICI Bank also made it to the Top 100 list
with a brand value of US$ 2.2 billion. The total brand value of the 20 Indian banks featured in
the list stood at US$ 13 billion.
Market analysis
There has been a gradual shift in business from public to private and foreign banks.
The banking system in India is dominated by Scheduled Commercial Banks (SCBs) with a pan-
India presence. As of March 2009, SCBs controlled most of the assets, with the rest being
controlled by a large number of small co-operative credit institutions with a very limited
geographic reach.
Within SCBs, public sector banks accounted for 71.9 per cent of the assets and the rest was held
by foreign banks and private sector banks.
Favorable demographics and rising income levels Rising literacy rate, especially in rural India,
has increased the need for banking. Between 2006 and 2026, the working population (25–60
years) is expected to increase from 675.8 million to 795.5 million giving rise to a favorable
market for banks. Projected per capita GDP is expected to increase from US$ 380.8 in 2000–01
to US$ 2,097.5 in 2026, reflecting higher disposable income.
Significant latent demand for retail banking services, given a low penetration level of
approximately 59 per cent. Key factors driving the growth of retail banking are„
With an increasingly global footprint, the Indian banking industry has adopted certain
global best practices such as International Financial Reporting Standards (IFRS) and
Basel II. These not only position India at an international level, but also provide
confidence to foreign players planning to establish businesses in India.
As of March 31, 2009, all commercial banks in India, excluding RRBs and local area
banks, have become Basel II compliant.
Major Developments
The Monetary Authority of Singapore (MAS) has provided qualified full banking (QFB)
privileges to ICICI Bank for its branch operations in Singapore. Currently, only SBI had QFB
privileges in country.
The Indian operations of Standard Chartered reported a profit of above US$ 1 billion for the first
time. The bank posted a profit before tax (PAT) of US$ 1.06 billion in the calendar year 2009, as
compared to US$ 891 million in 2008.
Punjab National Bank (PNB) plans to expand its international operations by foraying into
Indonesia and South Africa. The bank is also planning to increase its share in the international
business operations to 7 per cent in the next three years.
The State Bank of India (SBI) has posted a net profit of US$ 1.56 billion for the nine months
ended December 2009, up 14.43 per cent from US$ 175.4 million posted in the nine months
ended December 2008.
Government Initiatives
The government plans to invest US$ 3.63 billion into public sector banks to aid them for
maintaining their capital adequacy ratio (CAR), as per the Union Budget presented by the
Union Finance Minister in February 2010. Out of the total allocation, US$ 2.1 billion
would be used for recapitalization of the public sector banks during April-June 2010 and
US$ 1.5 billion will be invested during the rest of 2010-11.
The RBI has allowed banks to make changes in the repayment schedules or drawdown
without prior approval from the central bank. However, such a change could be made on
the condition that the average maturity of the loan should remain the same. The move is
expected to make external commercial borrowing (ECB) transactions easier. Transactions
both through automatic and approval routes can take advantage of this change. Now,
without the prior approval of RBI, Indian companies may borrow up to US$ 500 million
in a year.
Further, RBI also allowed domestic scheduled commercial banks to open up their
branches in Tier III to Tier VI regions that have population of up to 49,999 without the
prior permission of the central bank. Banks such as PNB and UCO Bank are planning to
take advantage of this initiative and would open around 440 and 89 branches,
respectively, in such regions.
In its platinum jubilee year, the RBI, the central bank of the country, in a notification
issued on June 25, 2009, said that banks should link more branches to the National
Electronic Clearing Service (NECS). Ideally, all core-banking-enabled branches should
be part of NECS. NECS was introduced in September 2008 for centralized processing of
repetitive and bulk payment instructions. Currently, a little over 26,000 branches of 114
banks are enabled to participate in NECS.
STRENGTH
■ Indian banks have compared favorably on growth, asset quality and profitability with other
regional banks over the last few years. The banking index has grown at a compounded annual
rate of over 51 per cent since April 2001 as compared to a 27 per cent growth in the market index
for the same period.
■ Policy makers have made some notable changes in policy and regulation to help strengthen the
sector. These changes include strengthening prudential norms, enhancing the payments system
and integrating regulations between commercial and co-operative banks.
■ Bank lending has been a significant driver of GDP growth and employment.
■ Extensive reach: the vast networking & growing number of branches & ATMs. Indian banking
system has reached even to the remote corners of the country.
■ The government's regular policy for Indian bank since 1969 has paid rich dividends with the
nationalization of 14 major private banks of India.
■ In terms of quality of assets and capital adequacy, Indian banks are considered to have clean,
strong and transparent balance sheets relative to other banks in comparable economies in its
region.
■ India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the
Government of India holding a stake)after merger of New Bank of India in Punjab National
Bank in 1993, 29 private banks (these do not have government stake; they may be publicly listed
and traded on stock exchanges) and 31 foreign banks. They have a combined network of over
53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the
public sector banks hold over 75 percent of total assets of the banking industry, with the private
and foreign banks holding 18.2% and6.5% respectively.
■ Foreign banks will have the opportunity to own up to 74 per cent of Indian private sector banks
and 20 per cent of government owned banks.
WEAKNESS
■ Old private sector banks also have the need to fundamentally strengthen skill levels.
■ The cost of intermediation remains high and bank penetration is limited to only a few customer
segments and geographies.
■ Refusal to dilute stake in PSU banks: The government has refused to dilute its stake in PSU
banks below 51% thus choking the headroom available to these banks for raining equity capital.
■ Impediments in sectoral reforms: Opposition from Left and resultant cautious approach from
the North Block in terms of approving merger of PSU banks may hamper their growth prospects
in the medium term.
OPPORTUNITY
■ The market is seeing discontinuous growth driven by new products and services that include
opportunities in credit cards, consumer finance and wealth management on the retail side, and in
fee-based income and investment banking on the wholesale banking side. These require new
skills in sales & marketing, credit and operations.
■ Banks will no longer enjoy windfall treasury gains that the decade-long secular decline
■ With increased interest in India, competition from foreign banks will only intensify.
■ Given the demographic shifts resulting from changes in age profile and household income,
consumers will increasingly demand enhanced institutional capabilities and service levels from
banks.
■ New private banks could reach the next level of their growth in the Indian banking sector by
continuing to innovate and develop differentiated business models to profitably serve segments
like the rural/low income and affluent/HNI segments; actively adopting acquisitions as a means
to grow and reaching the next level of performance in their service platforms. Attracting,
developing and retaining more leadership capacity
■ Foreign banks committed to making a play in India will need to adopt alternative approaches
to win the “race for the customer” and build a value-creating customer franchise in advance of
regulations potentially opening up post 2009. At the same time, they should stay in the game for
potential acquisition opportunities as and when they appear in the near term. Maintaining a
fundamentally long-term value-creation mindset.
■ Reaching in rural India for the private sector and foreign banks.
■ With the growth in the Indian economy expected to be strong for quite some time especially in
its services sector-the demand for banking services, especially retail banking, mortgages and
investment services are expected to be strong.
■ the Reserve Bank of India (RBI) has approved a proposal from the government to amend
the Banking Regulation Act to permit banks to trade in commodities and commodity derivatives.
■ Liberalization of ECB norms: The government also liberalized the ECB norms to permit
financial sector entities engaged in infrastructure funding to raise ECBs. This enabled banks and
financial institutions, which were earlier not permitted to raise such funds, explore this route for
raising cheaper funds in the overseas markets.
■ Hybrid capital: In an attempt to relieve banks of their capital crunch, the RBI has allowed
them to raise perpetual bonds and other hybrid capital securities to shore up their capital. If the
new instruments find takers, it would help PSU banks, left with little headroom for raising
equity. Significantly, FII and NRI investment limits in these securities have been fixed at 49%,
compared to 20% foreign equity holding allowed in PSU banks.
THREATS
■ Threat of stability of the system: failure of some weak banks has often threatened the stability of the
system.
Exploit Strategies
Search Strategies
Barriers to entry
Product
differentiation very
difficult
Licensing
requirement
Threat of Substitute
Non banking financial
sector increasing
rapidly
Deposits in posts
Stock Market
NBFC
Mutual Fund
Reserve Bank of India has laid out a stagnant rules and regulation for new entrant in Banking Industry.
We expect merger and acquisition in the banking industry in near future. Hence, the industry is less porn
of new competitor. Barriers to an entry in banking industry no longer exist. So lots of private and foreign
banks are entering in the market. Competitors can come from an industry to „disinter mediate‟ bank
product differentiation is very difficult for banks and exit is difficult. So every bank strives to survive in
highly competitive market so we see intense competitive can mergers and acquisitions. Government
policies are supportive to start new bank. There is less statutory requirement needed to start a new
venture. Every bank to tries to achieve economies of scale through use of technology and selecting and
training manpower. There are public sector banks, private sector and foreign banks along with non
banking finance companies competing in similar business segments
1. A large no of banks
There is so many banks and non financial institution fighting for same pie , which has intensified
competition?
5. Undifferentiated services
Almost every bank provides similar services. Every bank tries to copy each other services and technology
which increase level of competition.
Banking industry is governed by Reserve Bank of India. Reserve Bank of India is the authority to take
monetary action which leads to direct impact on circulation of money in the Economy. The rules and
regulation lay down by RBI. Suppliers of banks are depositors .these are those people who have excess
money and prefer regular income and safety. In banking industry suppliers have low bargaining power.
1. Nature of suppliers
Suppliers of banks are those people who prefer low risk and those who need regular income and safety as
well. Banks best place for them to deposits theirs surplus money.
In today world, Customer is the King. Banks offers different services According to clients need and
requirement. They offer loans at Prime Lending Rate (PLR) to their trust worthy clients and higher rate to
others clients. Customers of banks are those who take loans and uses services of banks. Customers have
high bargaining power. These are
1. Large no of alternatives
Customers have large no of alternatives, there are so many banks, which fight for same pie. There are
many non financial institutions like icici, hdfc, and ifci, etc. which has also jump into these business
.there are foreign banks , private banks, co-operative banks and development banks together with
specialized financial companies that provides finance to customers .these all increase preference for
customers.
3. Undiffenciated service
Bank provide merely similar service there are no much diffracted in service provides by different banks
so, bargaining power of customers increase.
They cannot be charged for differentiation.
Every day there is one or the other new product in financial sector. Banks are not limited to tradition
banking which just offers deposit and lending. In addition, today banks offers loans for all products,
derivatives, For Ex, Insurance, Mutual Fund, Demit account to name a few. The wide range of choices
and needs give a sufficient room for new product development and product enhancement. Substitute
products or services are those, which are different but satisfy the same set of customers. In private
banking industry following are the substitutes:
NBFC: Non-banking financial Institutions play an important role in giving financial assistance.
Mobilization of financial resources outside the traditional banking system has witnessed a
tremendous growth in recent years in the India. NBFC is a close substitute of banking in respect
of raising funds. Borrower can easily raise funds from NBFC because it requires less formal
procedure for getting funds compare to private banks.
Post Office Products: Post office is also providing some service like fixed deposit facility,
saving account, recurring account etc. The interest rate of saving account is higher than private
banks. It is fully secured by the government so people who do not want to take risk for them post
office saving is good substitute.
Government Bond: Govt. Bond also attracts savings from the general public. It is less risky and
more secured as compare to savings in private banks.
Mutual Funds: Mutual funds are also now proving as good substitutes for banks. They assure
for providing high return with less time in comparison of banks. The administrative expenses are
also very low as compared to banks. Investment in Mutual funds is more flexible than investment
in banks.
Stock Market: People who are ready to bear risk and wants a high return on their investment,
stock market is a good substitute for them. Day by day investors are moving towards stock
market as interest rate in banks are decreasing. So now stock market has proved as a big
competitor for baking sector.
Debentures: Debentures is also proved as a good substitute of bank‟s fixed deposit as return on
debenture is fixed and high. There are different types of debentures, which attract various classes
of investors.
Other Investment Alternatives: Now common people‟s attraction is shifting from banks to
other various alternatives such as gold, precious metals, land, small savings etc. As we can see the
growing trend in these alternatives in comparison of decreasing interest rates in banks.
FROM LPG India is moving on a steady GDP growth and trying to touch double digit growth
India also encouraging FDI and FIIs for investment in India
Percentage of youth in employment increased a lot in banking sector
Recently Indian banks are entering in Micro Finance to help the lower levels of economy
Some Banks are stated CSR activity in metros
Banks try to add value service to customers other than basic banking activity
Banking Industry in
India
The growth in the Indian Banking Industry has been more qualitative than quantitative and it is expected
to remain the same in the coming years. Based on the projections made in the "India Vision 2020"
prepared by the Planning Commission and the Draft 10th Plan, the report forecasts that the pace of
expansion in the balance-sheets of banks is likely to decelerate. The total asset of all scheduled
commercial banks by end-March 2010 is estimated at Rs 40, 90,000 crores. That will comprise about 65
per cent of GDP at current market prices as compared to 67 per cent in 2002-03. Bank assets are
expected to grow at an annual composite rate of 13.4 per cent during the rest of the decade as against the
growth rate of 16.7 per cent that existed between 1994-95 and 2002-03. It is expected that there will be
large additions to the capital base and reserves on the liability side.
The Indian Banking Industry can be categorized into non-scheduled banks and scheduled banks.
Scheduled banks constitute of commercial banks and co-operative banks. There are about 67,000
branches of Scheduled banks spread across India. As far as the present scenario is concerned the
Banking Industry in India is going through a transitional phase.
The Public Sector Banks (PSBs), which are the base of the Banking sector in India account for more
than 78 per cent of the total banking industry assets. Unfortunately they are burdened with excessive
Non-Performing assets (NPAs), massive manpower and lack of modern technology. On the other hand
the Private Sector Banks are making tremendous progress. They are leaders in Internet banking, mobile
banking, phone banking, ATMs. As far as foreign banks are concerned they are likely to succeed in the
Indian Banking Industry.
Despite intense competition and high inflationary pressures, India's sector will continue to show high growth owing
to the country's strong economic expansion. Growth in India's banking sector will remain high, bolstered by sound
economic growth prospects and expecting credit growth of about 20 per cent in the next fiscal year.
The growth in banking would happen despite high domestic inflation and intense competition in the sector, it added.
So, I conclude that the Indian banking industry is in growth stage from the above information
Company Analysis
The Bank is expanding in overseas markets and has the largest international balance sheet among
Indian banks. ICICI Bank now has wholly-owned subsidiaries, branches and representatives
offices in 19 countries, including an offshore unit in Mumbai. This includes wholly owned
subsidiaries in Canada, Russia and the UK (the subsidiary through which the HiSAVE savings
brand is operated), offshore banking units in Bahrain and Singapore, an advisory branch in
Dubai, branches in Belgium, Hong Kong and Sri Lanka, and representative offices in
Bangladesh, China, Malaysia, Indonesia, South Africa, Thailand, the United Arab Emirates and
USA. Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in particular.
SWOT Analysis of
STRENGTHS
1. BRAND NAME: ICICI Bank has earned a reputation in the market for extending quality
services to the market vis-Ã -vis its competitors. It has earned a strong Brand name in banking in
a very short span of time.
2. Market share: ICICI bank is the second largest bank after SBI. Its market share is the most
important strength of the company.
3. HUGE NETWORK: ICICI Bank has the highest number of linked branches in the country.
The bank operates through a network of 450 BRANCHES AND over 1800 ATMs across India,
thus enabling them to serve customer in better way.
4. DIVERSIFIED PORTFOLIO: ICICI Bank has all the products under its belt, which help it to
extend the relationship with existing customer. ICICI Bank has umbrella of products to offer
their customers, if once customer has relationship with the bank. Some Products, which ICICI
Bank is offering are:
>Retail Banking
>Business Banking
>Merchant Establishment Services (EDC Machine)
>Personal loans & Car loans
>Demat Services with E-Broking
>Mutual Fund (ICICI Bank is the Distributor of all Mutual Fund)
>Insurance
>Housing Loans
5. SALARY ACCOUNT: One very interesting thing that we have observed in our study is that
ICICI is having an edge over other banks in case of Salary Account. Most of the companies are
having their Salary Account with ICICI even if their Current Account is with any other Bank.
This is mainly because of the huge network of ATMs and branches of ICICI.
6. WORKING HOURS: ICICI is the only bank which is having its working hours from 8 to 8
which is one of the major strength of ICICI Bank with respect to IT & ITES Industry. As most of
the IT & ITES companies are global players and their Parent company is in US, so they have to
work according to their office time. Thus some have their Office time in the morning and some
have it in the evening so if the working hour of the bank is 8 to 8 it is very convenient for them.
7. TREASURY DEPARTMENT: ICICI is the first private bank to have a treasury department.
So customers can get the best rates for foreign exchange.
8. AGGRESSIVE MARKETING: ICICI Bank is known for its aggressive marketing of its
products. Recent ads like celebrating bdays of the customer in the banks; this gives ICICI an
edge over other banks.
9. TECHNOLOGY: From its inception, ICICI Bank has adopted a policy of selecting
internationally proven and specialized Packaged Systems for its technology. ICICI bank
technology platform has been acknowledged globally as one of the best in terms of robustness,
flexibility and cost efficiency. ICICI Bank is in a position to leverage this platform to further
build cost and service advantage.
WEAKNESS
1. TRANSACTION COST: ICICI Bank charges high cost for its transactions. Through our data
analysis we have find out that most of the small companies prefer nationalized banks only
because of this cost factor. Also the group has found out that there are companies which are
going for multi bank system i.e. they are using only those facilities of ICICI Bank which are
provided at cheaper rates (read Salary Account) and for other services they are going to
nationalize banks and MNCs (read Forex). So there exists a huge potential for ICICI Bank if they
are ready to make their transaction cost flexible.
2. FOCUS ONLY ON HIGH END CUSTOMERS: The bank targets only the top bracket of
clients and does not cater to the needs of small customers. Due to this reason the bank may
sometimes loose good clients.
4. LITTLE PRESENCE OUTSIDE INDIA: ICICI Bank is having little presence Outside India,
because of which companies prefer MNC Bank, mainly Citibank. So if ICICI Bank tries to
emerge outside India then it has a huge potential of customers.
5. POOR CUSTOMER CARE/SERVICE: With its aggressive marketing ICICI Bank is rapidly
increasing its customer base. They are not however, increasing the number of employees
accordingly. This is leading to deterioration of the standard of customer service.
OPPORTUNITIES
1.Rural segment: ICICI bank as lot of untapped market in rural areas. This is one of the most
important opportunities for the bank
2. Dissatisfied Customers of Other Banks: The group from its survey and analysis of IT
companies has found out that there are many companies which are not satisfied with its current
bank, so ICICI with its superior service quality and long working hours can capture those
customers.
3. Remittances: From the analysis group has also found out that ICICI bank has very little
presence as far as the EEFC account is concerned. Companies prefer to bank with MNCs (which
have greater presence in the foreign countries) and nationalized banks (which according to the
companies provide lower transaction rates) to get their inward remittances in spite of ICICI being
providing one of the most competitive rates. So the bank can promote its EEFC account better
and get the key to the door of huge potential market.
4. Business advising for smaller Players: The analysis has also indicated that the concept of
business advising though very popular with the higher end players is virtually nonexistent in the
lower end of the market. ICICI should take this opportunity to provide business advising to the
smaller companies at competitive rates and try to take the first mover advantage.
THREATS
1) Advent of MNC banks: Large numbers of MNC banks are mushrooming in the Indian market
due to the friendly policies adopted by the government. This can increase the level of
competition and prove a potential threat for the market share of ICICI bank.
2) Dissatisfied Customers: The analysis indicated that though most of the companies are satisfied
with the products offered by ICICI bank but the poor customer support/ service is creating a lot
of dissatisfaction among the customers, this can prove to be a serious problem as far as the
market reputation of the bank is concerned and cane be a major threat in future business
acquisition.
3) Ever improving nationalized banks: With PSU banks like SBI going all out to compete with
the private banks and government giving them a free hand to do so; it can prove to be serious
threat for banks like ICICI.
Current Ratio(x)
0.6
0.46 0.47
0.43
0.4
Current ratio measures liquidity of the firm. It represents a margin of safety available to the
creditor. High current ratio indicates that firm is liquid and able to pay current liability. From
2007, there is continuing growth of Current ratio which shows increase of current assets, which
is good sign for growth of ICICI bank.
Quick Ratio
26.86
23.33 22.24
Quick Ratio measures the ability of a company to use its near cash or quick assets to
immediately extinguish or retire its current liabilities. From above chart we can say easy that
there is huge growth of Quick ratio on YOY.It will reflect the liquidity of ICICI Bank.
EPS
EPS is one of the most important ratios to measure net profit earn per share. Steady growth of
EPS is indicating a good profitability. Earnings per share of ICICI bank are having a constant
growth.EPS is the one of the major reason to attract a huge investors.
Loans/Deposits ratio
Loan/Deposit ratio explains what portions of deposits are utilitized.coming to ICICI case there are lot ups
and down in the ratio. Loans/Deposits ratio is Moderate for ICICI bank.
EPS
EPS
SBI PNB ICICI ALLAHABAD BANK
144.37 143.67
123.86
98.03 106.56
86.29
64.98
48.84
36.1 33.76 37.37 34.59
27.01 21.82
17.21 16.79
We can see that EPS of ICICI is not higher than peer group. Bt EPS should not be one
parameter to measure of bank. Because outstanding share will be one reason i.e. different
bank outstanding share is different. But it is one of the main parameter to be considered by
the investor.
Payout Ratios
year 2010 2009 2008 2007
SBI 20.78 20.19 20.18 16.22
PNB 17.76 20.40 20.01 20.48
ICICI 33.24 32.58 29.44 28.91
ALLAHABAD BANK 20.36 20.34 11.46 17.87
PayOut ratios
SBI PNB ICICI ALLAHABAD BANK
33.24 32.58
29.44 28.91
20.78 20.36 20.19 20.40 20.34 20.18 20.01 20.48
17.76 16.22 17.87
11.46
Payout ratio is a ratio which shows as% of DPS from EPS. Payout ratio is ratio where all
investors are most concern. In the Peer group, ICICI payout ratio out performance the other
banks
P/E RATIO
YEAR 2010 2009 2008 2007
SBI 14.4 7.42 15 10.86
PNB 8.18 4.19 7.82 9.66
ICICI 26.39 9.85 20.61 24.67
ALLAHABAD BANK 5.28 2.26 3.51 4.33
P/E ratio
SBI PNB ICICI ALLAHABAD BANK
26.39 24.67
20.61
14.4 15
9.85 10.86 9.66
8.18 7.42 7.82
5.28 4.19 3.51 4.33
2.26
The PE ratio reflects the price currently being paid by the market for each rupee of currently
reported EPS. In other words, the PE ratio measures investor‟s expectations and the market
appraisal of the performance of the firm. P/E ratio is fluctuate time to time because market price
on of the reason. P/E ratio of ICICI BANK is the highest compared with its Peer group. The
main reason for higher P/E ratio is HIGHER SHARE PRICE AND LOW EPS.
Technical Analysis
Technical Analysis
Technical analysis is also frequently used as a supplement to fundamental analysis. Technical
analysis is based on the economic premise that forces of demand and supply determine the
pattern of market price and the volume of trading in a share. The greater the demand for a
company‟s shares, the higher its market price. The greater the supply of a company‟s shares in
the market, the lower the market price. The triggers for this demand and supply could also be the
fundamental news on the company. Technical analysis hopes to capture a price trend from the
previous traded prices and uses this trend to make an investment decision.
Bar Charts:
The bar chart gives the chartist information on price changes at a time. In this, the high, low,
open, close share price or index level is plotted against time.
1000
800
600
400
200
0
1-Apr-10 1-May-10 1-Jun-10 1-Jul-10 1-Aug-10 1-Sep-10
In the Chart the small bubbles are the closing price of the Infosys share for the particular day. On
the vertical line the top shows the high price for the day and down tells the lowest price for the
day. If the bubble in the middle of the vertical line then it tells the close price is in between the
low and high prices of the particular day.
Bullish Patterns
Long white (empty) line: This is a bullish pattern. It occurs when prices open ear the low and
close significantly higher, near the periods high.
Hammer: A hammer is bullish, if it occurs after a significant downtrend. It is identified by a
small real body (i.e. a small range between the open and closing prices) and a long lower shadow
(i.e., the low is significantly lower than the open, high, and close). The body can be empty or
dark.
Piercing Line: This is a bullish pattern and the opposite of a dark cloud cover. The previous
formation is a long black body and the next formation is a long white body.
Morning Star: This pattern signifies a potential bottom. The star indicates a possible reversal
and the bullish (empty) body confirms this. The star fallows a black body.
Bearish Patterns:
Long black (filled-in) line: This is a bearish line. It occurs when prices open near the high and
close significantly lower, near the periods low.
Hanging Man: These lines are bearish if they occur after a significant up trend. They are
identified by small real bodies (ie, a small range between the open and closing prices) and a long
lower shadow (ie, the low is significantly lower than the open, high, and close). The bodies can
be empty or filled in.
Dark cloud cover: This bearish pattern is more significant if the second black body is below the
center of the previous body.
Evening Star: This pattern signifies a potential top. The star indicates a possible reversal and the
bearish (black) body confirms this. The star fallows an empty body.
1000
800
600
400
200
0
3-May-10
9-Aug-10
10-May-10
17-May-10
24-May-10
31-May-10
2-Aug-10
16-Aug-10
23-Aug-10
30-Aug-10
5-Jul-10
12-Jul-10
19-Jul-10
26-Jul-10
7-Jun-10
14-Jun-10
21-Jun-10
28-Jun-10
Trend Analysis:
In the trend analysis we can find the down trend, sideway trend and up trend. In the
down trend we can observe that the price of the share can be fall down continuously. In the
sideway trend we can observe that the price of the share can move in up and downs with a
small changes in the price for a particular period. In the uptrend we can observe that the price
of the share can be in bullish way or in move up continuously for a particular period.
Support is the price level through which a stock or market seldom falls. Resistance, on the other
hand, is the price level that a stock or market seldom surpasses.
Support and resistance analysis is an important part of trends because it can be used to make trading
decisions and identify when a trend is reversing. For example, if a trader identifies an important level of
resistance that has been tested several times but never broken, he or she may decide to take profits as the
security moves toward this point because it is unlikely that it will move past this level.
Support and resistance levels both test and confirm trends and need to be monitored by anyone
who uses technical analysis. As long as the price of the share remains between these levels of support and
resistance, the trend is likely to continue. It is important to note, however, that a break beyond a level of
support or resistance does not always have to be a reversal. For example, if prices moved above the
resistance levels of an upward trending channel, the trend have accelerated, not reversed. This means that
the price appreciation is expected to be faster than it was in the channel.
Moving Averages
Moving averages are used to help identify the trend of prices. By creating an average of prices
that “moves” with the addition of new data, the price action on the security being analyzed is
“smoothed”. In other words, by calculating the average value of a share or indicator, day to day
fluctuations are reduced in importance and what remains is a stronger indication of the trend of
prices over the period being analyzed. The word “Moving” refers to the method of calculation
that takes the average value over a fixed period of time and adds the latest period data to the
calculation of the average while dropping the first period of the calculation. This ensures that the
average continues to be calculated by the same number of periods but movies with each new
period of data that occurs. Thus, the average “moves” along with price and changes in values as
price data is generated.
A longer term moving average such as the 200 day moving average is plotted to identify long-
term trends in price. A basic approach to using moving averages is to use an appropriate period
of moving average by identifying which term of price trend the investor wants to track down. In
this approach, when price is above the moving average it is an indication of bullish behavior.
When price falls from above the moving average to below the moving average, it is a warning
that price trend being viewed may be weakening. When price rises from below the moving
average to above the moving average, it is a bullish indication of the price trend.
For analysis ICICI bank trend I took 5 year stock price and 50days,100 days & 200 days moving
Average lines…….
1000
800
600 Close Price of ICICI BANK
400
50 days moving avg
200
0
From above graph, blue line represent ICICI bank share price and red line represent 50days
moving Average. I found when trend line cuts the ICICI bank share price line then there is
reverse Trend.
800
600 Close Price of ICICI BANK
400 100 days moving avg
200
0
From above graph, blue line represent ICICI bank share price and red line represent 100days
moving Average. I found when trend line cuts the ICICI bank share price line then there is
reverse Trend.
800
600 Close Price of ICICI BANK
400 200 days moving avg
200
0
From above graph, blue line represent ICICI bank share price and red line represent 200days
moving Average. I found when trend line cuts the ICICI bank share price line then there is
reverse Trend.
In above graph , where 200days moving average line cuts the share price line on 1 of aug 2006,
from then there is reverse trend.
Correlation and Beta calculations of ICICI Bank & S&P CNX NIFTY
For calculation of Correlation and Beta , I took data from 1jan 2009 to 30 July of 2010.
∑XY 1300.584403
∑X2 1326.382466
N 387
∑X 63.53563259
∑Y 91.10463083
β 0.9769564
CORELATION 0.5345049
Beta value describes the relationship between the stock return and market index return i.e. Beta
is a measure of a stock's volatility in relation to the market. If the regression line is at an exact
450 angle then beta equal to 1.Which mean that 1% change in market index 1% change in stock
return.
A stock that swings more than the market over time has a beta above 1.0. If a stock moves less
than the market, the stock's beta is less than 1.0. High-beta stocks are supposed to be riskier but
provide a potential for higher returns; low-beta stocks pose less risk but also lower returns.
In case of ICICI BANK I found there is beta of .9769 with NIFTY, which almost 1 mean it
Volatile same with NIFTY.
α 0.075020891
Y 0.172716536
I found, correlation between ICICI Bank and NIFTY is Positive and moving in same direction
with 0.5346 appox.
Conclusion
From the fundamental analysis it is clear that Indian economy doing well during this recession
period as compare to other developing or developed country. Actually Indian economy doing
well more than expectation because India‟s Gross Domestic Product (GDP) registered a better-
than-expected growth rate. In second quarter growth rate was 8.8% which is better than last year
same quarter. According to economist end of this fiscal year our growth rate will be 9.2%.
Sustained growth rate is good for Indian economy. But inflation is one of the reasons which can
sustain Indian growth. In the month of Aug it was 11.25%. But control inflation rate RBI has
taken some step like increase repo rate and reserve repo rate without disturbing growth rate.
According to recent data realize that Indian banking industry contributing 5.3times in Indian
growth so Indian banking industry in growing stage..
Fundamental analysis of ICICI Bank reflects ICICI bank is the largest bank in private sector,
growth rate of ICICI Bank is very high comparing to whole Banking industry. Price earnings
ratio icici bank out performance the whole industry. Recent Acquisition of BOR by ICICI bank
helps ICICI bank to expand its Branch and acquisition help ICICI to acquire large business in
Rajasthan. At present ICICI Bank has 2000 branches by acquisition of BOR adds 463 additional
Branches, which makes ICICI bank as the strongest network in India after State bank of India. It
has a strong back end team to upgrade technology by time to time. Fundamental Analysis
strongly finds a huge growth in ICICI bank. Therefore, I recommend strongly to buy and if
already has then HOLD the share.
Technical analysis of ICICI bank share say it has a positive correlation with NIFTY. In Trend
line analysis I found there is UP TREND in the stock from Sep 2008 and it has a able to
continue its trend because of factors like Acquisition of BOR, huge growth in Banking industry
and its Outstanding innovative products. From Technical analysis, I Recommend buying of
ICICI BANK share and if already purchased then hold for a while.
Bibliography
http://money.livemint.com/IID64/F100112/Financial/Ratios/Company.aspx
http://money.livemint.com/IID64/F100180/Financial/Ratios/Company.aspx
http://money.livemint.com/IID64/F132215/Financial/Ratios/Company.aspx
http://money.livemint.com/IID64/F131807/Financial/Ratios/Company.aspx
http://money.livemint.com/IID64/F100116/Financial/Ratios/Company.aspx
http://money.livemint.com/IID64/F100315/Financial/Ratios/Company.aspx
http://money.livemint.com/IID64/F132210/Financial/Ratios/Company.aspx
http://data.worldbank.org/country/india
http://www.global-rates.com/economic-indicators/inflation/consumer-prices/cpi/india.aspx
http://www.nseindia.com/
Annexure
For technical analysis I took 5 year data of icici bank from 2005 to 2010 from NSE INDIA….
Symbol Series Date Open Price High Price Low Price Close Price of
ICICI BANK