Equity Research

Reliance Money Limited
SUMMER INTERNSHIP PROJECT

ON
EQUITY RESEARCH
FUNDAMENTAL ANALYSIS OF 2 CO.S
FROM BANKING SECTOR
Submitted To
In Partial Fulfillment of requirements of

3RD Term (PGDBM Program)
Submitted By
SHIBI JOHN
REG NO: 07MMA2671
Under special guidance of

Mr. ANKUR MEHTA
(2007-2009)
MATS School Of Business and IT

ACKNOWLEDGEMENT
I would like to express my heartfelt gratitude and
appreciative obligations to Prof. Udayachandra and Prof. NVH
Krishnan, Deans of MATS School of Business and IT, Bangalore,
for their kind and constant encouragement that gave me the
opportunity of working on this project & inspired me to do it
successfully.
I wish to take this opportunity to express my deep
sense of gratitude to Mr. Ankur Mehta, MATS School of Business,
Bangalore, for his invaluable guidance in this endeavor. I sincerely
thank him for his valuable suggestions, constant encouragement and
help that he extended towards me to prepare this report.
I also take the opportunity to thank Mr. Aditya –
Branch Manager(Cunningham Branch),Mr. Vikrant- Industry
Mentor for providing me the requisite information & helping me in
the successful completion of the project. I would also like to give
my sincere thanks to all the departmental heads, in-charge and the
administrative staff of the organizations for giving me relevant
information and support required to complete my study.
Place: Bangalore SHIBI JOHN
Date:

TABLE OF CONTENT
PARTICULARS Page No.

Chapter 1 Introduction to the study
Introduction
Objectives of the study
Research Methodology
Literature Review
Chapter 2 Industry Profile
Chapter 3 Company Profile
Chapter 4 Analysis & Interpretation
Analysis of Primary Data
Analysis of Secondary Data
Chapter 5 Findings, Recommendations & Conclusions
Findings
Recommendations
Conclusions
Limitations Of The Study
Bibliography

ABSTRACT
Project Title:-Equity Research(A Study on the Fundamental Analysis Of 2
Companies From Banking Sector).
Fundamental Analysis is the process of looking at a business at the basic or
Fundamental financial level. This type of Analysis examines key Ratios of a
business to determine its financial health and gives an idea of the value of its stock.
The goal is to determine the current worth and, more importantly, how the market
value the stock. Fundamental Analysis seeks to determine future stock price by
understanding and measuring the objective “value” of Equity. The biggest part of
Fundamental analysis involves delving into the financial statements. Also known as
quantitative analysis, this involves looking at revenue, expenses, assets, liabilities
and all other financial aspects of a Company. Fundamental analysis look at this
information to gain insight on a Company’s future performance. In this Project
Fundamental Analysis of Two Companies has been done in which each Company’s
present as well as past performance has been Compared with all the relevant
financial Ratios and then the Present Scenario of the Company is Compared with
Industry average. Industry average is kept as a benchmark to see that the particular
stock has been over valued or undervalued.
Reliance Capital is the Parent Company of Reliance Money.Reliance Money is the
financial services division of the Anil Dhirubhai Ambani Group. The broking arm of
reliance Capital is Reliance Money. Reliance Money is to offer a common platform
for investors to invest in all equity products, commodities, forex, IPOs, insurance
and other financial services.

CHAPTER 1
INTRODUCTION TO THE STUDY
The role of research is to provide appropriate information to the market to help investors and
traders to take appropriate decisions. Financial markets are basically classified into two, Primary
markets and the Secondary markets. Platforms which come under the former are IPO’s &
NFO’s. The important platform under secondary market is the Stock Market. Investment in these
stock markets is a big risk. Everyone cannot master the art of investing in stock markets. It
requires lot of experience and expertise to enter and exit the markets. Picking the right stock at
the right time is no child’s play. In order to master the art of investment an investor has to master
the steps in portfolio management. That is Fundamental analysis and Technical analysis.
The topic for the summer internship project would be based on equity research pertaining to the
Fundamental analysis. Fundamental Analysis is a method of evaluating a security by attempting
to measure its intrinsic value by examining related economic, financial and other qualitative and
quantitative factors. Fundamental analysis of a business involves analyzing its income statement,
financial statements and health, its management and competitive advantages, and its competitors
and markets. The analysis is performed on historical and present data, but with the goal to make
financial projections.
There are several possible objectives:
• To conduct a company stock valuation and predict its probable price evolution.
• To make projection on its business performance.
• To evaluate its management and make internal business decisions.
• To calculate its credit risk.
Two Analytical Models
When the objective of the analysis is to determine what stock to buy and at what
price, there are two basic methodologies.
1. Fundamental Analysis:- It maintains that markets may misprice a security

in the short run but that the "correct" price will eventually be reached.

Profits can be made by trading the mispriced security and then waiting for
the market to recognize its "mistake" and reprice the security. The end goal
of performing fundamental analysis is to produce a value that an
investor can compare with the security's current price in hopes of figuring
out what sort of position to take with that security (underpriced = buy,
overpriced = sell or short). This method of security analysis is considered to
be the opposite of technical analysis.
2. Technical Analysis:- It maintains that all information is reflected already in
the stock price.
Investors can use both these methods for stock picking. Many fundamental
investors use technicals for deciding entry and exit points. Many technical
investors use fundamentals to limit their universe of possible stock to 'good'
companies. The choice of stock analysis is determined by the investor's belief
in the different paradigms for "how the stock market works".
Summary of Fundamental analysis
• Financial reports are required by law and are published both quarterly and
annually.
• Management discussion and analysis (MD&A) gives investors a better
understanding of what the company does and usually points out some key
areas where it performed well.
• Audited financial reports have much more credibility than unaudited ones.
• The balance sheet lists the assets, liabilities and shareholders' equity.
• For all balance sheets: Assets = Liabilities + Shareholders’ Equity. The two
sides must always equal each other (or balance each other).
• The income statement includes figures such as revenue, expenses, earnings
and earnings per share.
• For a company, the top line is revenue while the bottom line is net income.
• The income statement takes into account some non-cash items, such as
depreciation.
• The cash flow statement strips away all non-cash items and tells you how
much actual money the company generated.
• The cash flow statement is divided into three parts: cash from operations,
financing and investing.
• Always read the notes to the financial statements. They provide more in-
depth information on a wide range of figures reported in the three financial
statements.

OBJECTIVE OF THE STUDY:
• To understand the practical application of tools of Fundamental analysis.

To understand the concept of Fundamental analysis.
• To suggest how Fundamental analysis can be effectively used by the investors in
forecasting stock prices.
• To provide better information for the investors while taking short term investment
decisions.
To understand the concept of portfolio management.
To suggest the most robust and appropriate tool for Fundamental analysis.
RESEARCH METHODOLGY:
- The research was done by taking two Companies from Banking sector And then doing
the Fundamental Analysis of those two Companies.
- The survey was done through primary and secondary data.
- Primary data was collected with the help of the Equity Advisors.
-The secondary data was collected through corporate resources, journal, statistical reports
etc.
HYPOTHESIS
H0:- The Market Share of a Company does not depend upon the Financial Position
of the Company.
H1:- The Market Share of a Company depends upon the Financial Position of the
Company.

H0:- The Performance of the Selected Company’s are not the representative of the
Industry Performance.
H1:- The performance of the Selected Company’s are the representative of the
Industry Performance.

LITERATURE REVIEW:-
Literature Review is basically done to understand the concept in a better way. By
doinfg literature review we get an indepth knowledge about the Concept. The
following are some of the articles from various Authors.
1. [Author: Salcedo, Yesenia

Article: Follow The Fundamentals
Source: EBESCO: Futures: News, Analysis & Strategies for Futures,
Options & Derivatives Traders; Nov2006, Vol. 35 Issue 14, p56-58, 3p]
The article discusses the importance of Fundamental Analysis in trading Paul Kim,
president and managing member of LaSalle Asset Management, states that a focus
on the Fundamentals has certain advantages, a Fundamental trader will have an
idea of the direction the markets will go and an idea of what factors can change the
direction.
In other words, it can be said that those who are having the idea of Fundamentals
they will be able to predict the market in a right way & therby can invest in those
markets.
2. [ Author: Giner, Begona, Reverte, Carmelo;

Article: The Risk-Relevance of Accounting Data: Evidence from the
Spanish Stock Market;
Source: EBESCO: Journal of International Financial Management &
Accounting; Autumn2006, Vol. 17 Issue 3, p175-207, 33p, 6 charts]
This article analysis the relevance of accounting Fundamentals to inform

about equity risk as measured by the cost of equity capital. Assuming the
latter is a summary measure of how investors make decisions regarding the
allocation of resources, the strength of the association between the cost of
capital and the accounting-based measures of risk indicates how important
these measures are for market participants when making economic
decisions. Our results support our initial expectations regarding the
association between the cost of equity capital and the accounting-based risk
variables, thereby supporting the usefulness of Fundamental to determine
the risk inherent in share's future payoffs.

In other words, Cost of Equity Capital is a very important tool for

measuring Equity Risk. Investors make use of this tool while taking any
decisions.
3. [Author: Shaw, Stuart

Article: Think like an owner, because you are one.
Source: EBSCO: Inside Tucson Business; 8/14/2006, Vol. 16 Issue 9, p27-
27, 1/2p]
The article focuses on the Fundamental factor considered in Company Stock

Risk Profile, a comprehensive research process based on Fundamental
Analysis, for investors in Tucson, Arizona. The important step is to know
and understand the company's business. Investors need to trust their
judgment about how well a company is doing. It is also important to focus
on the cash generated by the company from operations.
Here the Author Says that before investing in any Company the investor
should know how the Company is performing. The Investors should look at
the goodwill of the Company & then only he should invest.
4. [Article: Walking the Fundamental Analysis Talk.

Source: Finweek; 8/10/2006, p51-51, 0p]
The article provides an overview of the use of Fundamental Analysis by

investors. It combines an in-depth examination of the economic
environment, industry and the company itself to predict future earnings
growth to compute company share price. There are two approaches for
making a Fundamental analysis: the top-down approach and the bottom-up
strategy.
In other words for doing Fundamental Analysis Macro environmental
Factors are considered.
5. [ Article: Explaining Fundamental analysis

Source: Finweek; 8/3/2006, p43-44, 2p]
The article provides information about Fundamental Analysis. It is the

study of a company's Fundamentals with the goal of calculating exactly
what a listed company is worth. It focuses on creating a portrait of a
company, identifying the intrinsic or Fundamental value of its shares
according to Investopedia.com. Most professional analysts performed it in
either stock broking or asset management teams.
6. [Author: Eldomiaty, Tarek Ibrahim, Chong Ju Choi

Article: Do Informativeness of Co-Integrated Financial

Fundamentals Contribute to Shareholder Value in a Transitional
Market ?
Source: Journal of Financial Management & Analysis; Jan-
Jun2006, Vol. 19 Issue 1, p14-25, 12p]
This article examines the informativeness of Fundamental financial

information to three levels of market-to-book(MB) ratio: high MB firms,
medium MB firms, and low MB firms. In general, the results indicate that
the financial ratios (as co-integrated financial information) are relatively
quite informative to the three shareholder value classes. The results
regarding the Fundamental Analysis indicate that (a) in the low MB firms,
the investors are concerned with the long-term horizon, (b) in the medium
MB firms, the operating and total expenses are regarded as a capital
investment, (c) in the high MB firms, the trend is to finance operations
using equity rather than debt financing, (d) profitability affects low MB
firms only rather than high and medium firms, (e) in the high and medium
MB firms, investors do not regard the elements related to firm's operations,
(f) in the low MB firms, investors are concerned with the effects of capital
structure although the results show that dividends have a reverse effect on
firm's market value.
Proceedings of the Project:
The project is basically on Equity Research that is pertaining to the Fundamental

Analysis of the two Companies from Banking sector. The Companies taken are
ICICI Bank & KOTAK MAHINDRA Bank. Fundamental Analysis will help in
understanding how the companies are performing & by doing this the growth of
the company can be analyzed in a more appropriate way.
The Following tools are used for doing Fundamental Analysis. They are:
1. Liquidity Ratios:- Liquidity refers to the ability of a firm to meet its

obligations in the short run, usually one year. It is generally based on the
relationship between current assets and current liabilities. The important
liquidity ratios are
(a). Current Ratio:- It is the ability of the firm to meet its current liabilities.
Higher the current Ratio, the greater the short term solvency. The general norm
for current ratio in India is 1.33 & internationally it is 2.
Current Ratio = Current Assets/Current liabilities

(b). Acid Test Ratio:- This Ratio is a stringent measure of liquidity. It is based
on those current assets which are highly liquid. Inventories are excluded from
the numerator.
Acid Test Ratio= Quick Assets/Current liabilities
(c). Cash Ratio:- This is also a measure of Liquidity.

Cash Ratio= Cash & Bank Balances + Current Investments/Current Liab.
2. Leverage Ratios:- This Ratio help in assessing the risk arising from the
use of debt capital.
(a). Debt Equity Ratio:- It Shows the relative Contributions of Creditors and
Owners. It is calculated as:-
Debt Equity Ratio= Debt /Equity
(b). Debt Asset Ratio:- This Ratio measures the extent to which borrowed
funds support the firm’s assets. It is calculated as:-
Debt Asset Ratio= Debt / asset
(c). Interest Coverage Ratio:- This Ratio is widely used by the lenders to
assess a firm’s debt capacity.
Interest Coverage Ratio= Profit before interest & Taxes / Interest
3. Turnover Ratios:- This Ratio measures how efficiently the assets are
employed by a firm. It is also referred to as Activity Ratios or Asset
Management Ratios.
(a). Fixed Assets Turnover:- This Ratio measures sales per rupee of Investment in
Fixed Assets. It is Calculated as:-
Net Sales / Average Net Fixed Assets
(b). Total Assets Turnover:- This Ratio measures how efficiently assets are
employed, overall. It is calculated as:-
Net Sales / Average Total assets
4. Profitability Ratios:- This Ratio reflects the final result of Business

operations.

(a). Gross Profit Margin Ratio:- This Ratio shows the margin left after
meeting manufacturing Costs. It measures the efficiency of production as well
as pricing. It is Calculated as:-
Gross Profit / Net Sales
(b). Net Profit Margin Ratio:- This Ratio shows the earnings left for
shareholders ( both Equity & Preference) as a percentage of Net Sales. It Measures
the overall efficiency of Production, Administration, Selling, Financing, Pricing
and Tax Management. It is Calculated as:-
Net Profit / Net sales
(c).Return On Assets:- ROA is an odd measure because its numerator

measures the return to shareholders( Equity & Preference) whereas its denominator
represents the contribution of all investors( shareholders as well as lenders). It is
Calculated as:-
Profit after tax / Average Total Assets
(d). Earning Power:- It’s a measure of business performance which is not

affected by Interest Charges and Tax Burden. It is Calculated as:-
Profit before Interest & tax / Average Total Assets
(e). Return On Capital Employed:-It is the post-tax version of Earning

Power. It considers the effect of Taxation but not the Capital Structure. It is
Calculated as:-
Profit before Interest & Tax(1- Tax Rate) / Average Total Assets
(f). Return On Equity:-This Ratio is a great interest to equity shareholders. It

measures the Profitability of Equity funds invested in the firm. Its an important
Ratio because it reflects the productivity of ownership. It is Calculated as:-
Equity Earnings / Average Equity
5. Book Value per Share:- The Value at which an asset is carried on a

balancesheet. In other words, the cost of an asset minus accumulated depreciation.
By being Compared to the Company’s Market value, the book Value can indicate
whether a stock is under or over priced. It is calculated as:-

Paid-up equity capital + Reserves & surplus/ No. of O/S Equity Shares
6. Earnings Per Share:- The portion of a company's profit allocated to each

outstanding share of common stock. EPS serves as an indicator of a company's
profitability. It is Calculated as:-
Equity Earnings/No of Outstanding Shares
7. Dividend Payout Ratio:- The dividend Payout Ratio represents the

proportion of equity earnings which is paid out as dividends. It is Calculated as:-
Equity Dividends/Equity Earnings
8. Price to Earnings Ratio (PE):- A Valuation ratio of a company’s current

share price compared to its per share Earnings. It is Calculated as:-
Market Value per Share/Earnings per Share

INDUSTRY
PROFILE

NON BANKING FINANCIAL COMPANIES

A Non Banking Financial Company(NBFC) is a Company registered under the
Companies Act,1956 and is engaged in the business of loans and Advances,
acquisition of Shares/stock/bonds/debentures/securities issued by Government or
local authority or other securities of like marketable nature, leasing, hire-purchase,
insurance business, chit business but does not include any institution whose
principle business is that of agriculture activity, industrial activity,
sale/purchase/construction of immovable property. A non-banking institution has
its principle business of receiving deposits under any scheme or arrangement or
any other manner, or lending in any manner is also a non- banking financial
company (Residuary non-banking company).
In other words Non-bank financial companies (NBFCs) are financial institutions

that provide banking services without meeting the legal definition of a bank, i.e.
one that does not hold a banking license. Operations are, regardless of this, still
exercised under bank regulation. However this depends on the jurisdiction, as in
some jurisdictions, such as New Zealand, any company can do the business of
banking, and there are no banking licences issued.
Non-bank institutions frequently acts as

• Suppliers of Loans and Credit facilities
• Supporting investments in property
• Trading Money market instruments
• Funding private education
• Wealth management such as Managing portfolios of stocks and shares
• Underwrite stock and shares, TFCs and other obligations
• Retirement Planning
• Advise Companies in Mergers and Acquisitions
• Prepare Feasibility, market or industry studies for Companies
• Discounting services e.g. discounting of instruments
NBFCs are doing functions akin to that of banks, however there are a few
differences:
(i) a NBFC cannot accept demand deposits

(ii) it is not a part of the payment and settlement system and as such cannot
issue cheques to its customers; and
(iii) Deposit insurance facility is not available for NBFC depositors unlike in
case of banks.
In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC
should be registered with RBI to commence or carry on any business of non-
banking financial institution as defined in clause (a) of Section 45 I of the RBI Act,
1934.
However, to obviate dual regulation, certain category of NBFCs which are

regulated by other regulators are exempted from the requirement of registration
with RBI viz. Venture Capital Fund/Merchant Banking companies/Stock broking
companies registered with SEBI, Insurance Company holding a valid Certificate of
Registration issued by IRDA, Nidhi companies as notified under Section 620A of
the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of
the Chit Funds Act, 1982 or Housing Finance Companies regulated by National
Housing Bank.
The NBFCs that are registered with RBI are:
(i) equipment leasing company;

(ii) hire-purchase company;
(iii) loan company;
(iv) investment company.
CLASSIFICATION
Depending upon their nature of activities, non- banking finance companies can be
classified into the following categories:

1. Development finance institutions

2. Leasing companies
3. Investment companies
4. Modaraba companies
5. House finance companies
6. Venture capital companies
7. Discount & guarantee houses
Non-Banking Financial Institutions
Non-banking Financial Institutions carry out financing activities but their

resources are not directly obtained from the savers as debt. Instead, these
Institutions mobilize the public savings for rendering other financial services
including investment. All such Institutions are financial intermediaries and
when they lend, they are known as Non-Banking Financial Intermediaries
(NBFIs) or Investment Institutions.
• UNIT TRUST OF INDIA

• LIFE INSURANCE CORPORATION (LIC)
• GENERAL INSURANCE CORPORATION (GIC)

COMPANY
PROFILE
RELIANCE MONEY

The Parent Company
Brief Introduction:
Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC)

registered with the Reserve Bank of India under section 45-IA of the Reserve Bank
of India Act, 1934. RCL was incorporated as a public limited company in 1986 and
is now listed on the Bombay Stock Exchange and the National Stock Exchange
(India).
BUSINESS DESCRIPTION
Reliance Capital (RCL), a member of the Reliance Group, is a private sector

financial services company. Reliance Capital deals with the following:-
• Asset management
• Mutual funds
• Life and general insurance
• Private equity and proprietary investments
• Stock broking and
• Other financial services.
RCL primarily focuses on funding projects in the infrastructure sector and supports
the growth of its subsidiary companies, Reliance Capital Asset Management,
Reliance Capital Trustee, Reliance General Insurance and Reliance Life Insurance.
Reliance Capital Asset Management, a wholly owned subsidiary of Reliance
Capital manages Reliance Mutual Fund schemes. Reliance Mutual Fund and
Reliance money offers investors a well-rounded portfolio of products to meet
varying investor requirements. Reliance Mutual Fund is active in over 80 cities

across India with an investor base of over 2 million and manages assets over Rs
27,914 crore as on May 31, 2006. Reliance Life Insurance is an associate company
of RCL offering a range of products catering for individual and corporate clients.
The company has a total of 16 products in its range, covering savings, protection
and investment requirements. Reliance General Insurance, a Subsidiary of RCL, is
a non-life insurance company offering a range of insurance products covering risks
including property, marine, casualty and liability.
Reliance Capital is one of India’s leading and fastest growing private sector
financial services companies, and ranks among the top 3 private sector financial
services and banking companies, in terms of net worth.
Reliance Capital Limited wholly owns subsidiaries include Reliance Capital Asset
Management Ltd., Reliance Capital Trustee Co. Ltd., Reliance Asset Management
(Mauritius) Ltd. and Reliance Capital Asset Management (Singapore) Pte. Ltd.
The Reliance as a whole has been predominant in all the growth sectors and which
has identified financial services sector as an potential for grabbing the market share
in the financial markets. Some of the sectors to which the company has ventured
into is as given below:
Textiles – Vimal Suitings.
Financial service- Reliance Money.
Petro - Reliance Petroleum Ltd.
Chemicals – Reliance Industries Limited.
Power/Energy – Reliance Energy Limited.
Capital/Finance – Reliance Capital.

Retail – Reliance Retail.
Phone – Reliance Telecomm.
School – Dhirubhai Ambani International School at BKC.
Hospital – Harkindas Hospital.
Medicals – Reliance Life Science.
Entertainment – Adlabs.
VISION OF THE COMPANY
“To aspire to the highest global standards of quality and efficiency, operational
performance, and customer care and to be the world leader in the business world-
class financial services enterprise”
Introduction to Reliance Money:
Reliance Money is the financial services division of the Anil Dhirubhai Ambani
Group. The broking arm of reliance Capital is Reliance Money. Reliance Money
is to offer a common platform for investors to invest in all equity products,
commodities, forex, IPOs, insurance and other financial products.
Reliance Money has partnered with UK-based CMC Markets, a global player in
the online derivatives trading segment, to bring overseas investment products to
Indian investors.
This tie-up will enable customers’ of Reliance Money to gain access to several
offshore products including —foreign equities, currency and commodities within
the RBI-mandated limits. The central bank currently permits a single Indian
resident to invest up to $50,000 (Rs 22.5 lakh) overseas per year, which has been
raised from the earlier $25,000.

Thus Reliance Money is an endeavor to change the way India trades in financial
markets and avails of various financial services. Reliance Money ensures
maximum security with a unique security token to keep your online account safe.
Reliance Money is the fast growing financial broking business through the
introduction of its much awaited Reliance Money broking business. The company
is proposing a variation of the fixed flat fee structure that it claimed was the most
competitive in the industry.
VISION STATEMENT OF RELIANCEMONEY
“To be world leader in the business by providing a convenient transparent and

trustworthy online platform for effective wealth management”
Products:
Reliance Money has the facility of providing various financial products in single
window. Through their portal and as well as in their off-line, as a competitive
approach to that of their competitors. The products offered are:
• Equity
• Derivatives
• IPO
• Commodities
• Mutual Funds
• Forex
• Insurance.
Business Objectives of Reliance Money:
• To provide a wide variety of products to the market.

• To enable the low income group also to participate in the business cycle.
• To occupy the top slot in the minds of the public and prove to be a brand to
rely upon.
COMPETITORS:
The Indian retail brokerage market is showing phenomenal growth. The total
trading volume of brokerage companies has increased from US$1239.1 billion in
2004 to US$1492.1 billion in 2005, and is expected to reach US$6535.7 billion by
2015. The major Competitors are:
• ICICI Securities Ltd. (www.icicidirect.com).

• Kotak Securities Ltd. (www.kotaksecurities.com).
• Indiabulls Financial Services Limited (www.indiabulls.com).
• India Infoline (www.5paisa.com).
• IL&FS investmart Limited (www.investsmartindia.com).
• SSKI Ltd. (www.sharekhan.com).
• Motilal Oswal Securities (www.motilaloswal.com).
• Fortis Securities
• (Religare) (www.fortissecurities.com).
• Karvy (www.karvy.com).
• Geojit Securities (www.geojit.com).
• HDFC Securities (www.hdfcsec.com).
Customers:
The company segmented the market into three and provides services to suit the
needs of each segment. The basis of segment is as below
• The market which is new to online trading

• The market which has some experience investing online

• The market which is investing heavily online and which has good
knowledge and expertise in this field.
Thus the company has concentrated on each segment individually and brought the
whole market under its coverage.
Benefits offered to customers:
• Flexibility: All products on ONE platform

• Margin: 1% to 5%
• Electronic Trading: Minimal paperwork, no share-certificates, physical
trade confirmation or transfer forms.
• Shorting is as easy as going long.
• Cost-effectiveness: no DP fee, turnover charges, education cess, stamp duty
or service tax. Forex has no commission/brokerage charge either.
• No time limit on positions.
• Low minimum trade size.
Achievements of Reliance Capital:
Reliance Money: named as the one of the lowest brokerage in India in the trading
platform.
Reliance Term Fund-Growth Plan was named best three-year return fund in the
Bond India Rupee segment.
Reliance MF schemes have been recognized as best performers for the second
time, the company said, after Reliance Growth and Reliance Vision were ranked as
top two funds globally in November 2006 based on their five year performance
track record.

Reliance MF said in a statement that it has bagged awards across six sectors for
their consistent and outstanding performance across three and five year time
periods.
Reliance Banking Fund Growth Plan bagged the best fund award for three-year
return in the equity banking segment, while Reliance Growth Fund was named as
best equity funds in three-year as well as five-year return categories.
Reliance MF said in a statement that it has bagged awards across six sectors for
their consistent and outstanding performance across three and five year time
periods.

ICICI BANK
ICICI Bank Listed in BSE as well as NSE formerly known as Industrial Credit and
Investment Corporation of India is India's largest private sector bank in market
capitalization of about Rs. 480.00 billion (US$ 10.8 billion) ranked third amongst
all the companies listed on the Indian stock exchanges in June 2006 and second
largest overall in terms of assets. ICICI Bank is spread across the length and
breadth of the country. ICICI Bank has total assets of about USD 100 Billion (end-
Mar 2008), a network of over 1308 branches and offices, about 3950 ATMs, and
24 million customers (as of end July 2007). ICICI Bank offers a wide range of
banking products and financial services to corporate and retail customers through a
variety of delivery channels and through its specialised subsidiaries.
ICICI Bank affiliates in the areas of
• Investment banking
• Life and non-life insurance,
• Venture capital and
• Asset management.
ICICI Bank is also the largest issuer of credit cards in India. ICICI Bank has listed
its equity shares on stock exchanges at Kolkata and Vadodara, Mumbai and the
National Stock Exchange of India Limited, and its ADRs on the New York Stock
Exchange (NYSE).
The Bank is expanding in overseas markets and has the largest international
balance sheet among Indian banks. The Bank now has wholly-owned subsidiaries,
branches and representatives offices in 18 countries, including an offshore unit in
Mumbai. This includes wholly owned subsidiaries in the UK, Canada and Russia,
offshore banking units in Singapore and Bahrain, an advisory branch in Dubai,
branches in Sri Lanka, Hong Kong and Belgium, and rep offices in the US, China,
United Arab Emirates, Bangladesh, South Africa, Indonesia, Thailand and
Malaysia. In particular, the bank is targeting the NRI (Non Resident Indian)
population.
ICICI Bank reported marked-to-market loss of $264 million as of January 31, 2008
following the USA subprime mortgage crisis.
The Foreign Investment Promotion Board (FIPB) cleared ICICI Bank's proposal to
float a wholly--owned subsidiary called ICICI Financial Services on 18 August
2007. This subsidiary will hold ICICI Bank's investments in the insurance and
mutual fund businesses. FIPB also approved the stake sale of up to 24 per cent in

ICICI Financial Services to the foreign investors. However, ICICI Bank will
require the full and final clearance of the Reserve Bank of India in this regard.
According to media reports, ICICI Bank plans to float an initial public offer (IPO)
for ICICI Securities, its wholly-owned capital market subsidiary, by June 2008.
COMPETITORS OF ICICI BANK

ICICI Bank competitors are primarily in the Banking - Asia & Australia industry.
ICICI Bank also competes in the Private Banking, Asset Management, and
Investment Firms sectors.
ICICI Bank competitive landscape includes:
• Canara Bank
• Punjab National Bank
• State Bank of India
AGREEMENTS SIGNED BY ICICI BANK:
• In August 2007, ICICI Bank signed a USD 200 million revolving line of
credit with the Export--Import Bank of Korea. As per this agreement the
bank's Hong Kong branch will avail the line of credit to finance foreign
currency requirements of Indian corporates and corporates of neighbouring
countries having equity participation by Korean companies or having
business relationship with Korean companies.
• The bank also signed a loan agreement totalling the yen--equivalent of USD
200 million with Japan Bank for International Cooperation. Earlier in
February 2007 ICICI Bank and Raiffeisenlandesbank Oberosterreich (RLB)
signed for cooperation in areas of banking business, especially funding,
commercial and syndicated credit business and cash management services.

KOTAK MAHINDRA BANK

Kotak Mahindra Bank Limited was incorporated in 1985 as Kotak Mahindra
Capital Management Finance limited and was renamed as Kotak Mahindra Finance
Limited in 1986. It was finally renamed as Kotak Mahindra Bank Limited in 2003.
The Prompters Kotak Mahindra group holds around 58% of the total share capital
of the bank, Institutional investors hold about 24%, while the Indian public holds
around 14%. The Chairman of the Bank is Mr. K.M. Gherda and the Executive VC
and Managing Director is Mr. Uday Kotak.
The Bank offers services in Retail and Corporate banking. In Retail Banking it
offers Deposits such as Saving and Current accounts and term deposits. Retail
Banking also offers loans such as personal and Home loans. The Investment
services offered in the retail banking range from Fixed deposits to Insurance,
Mutual Funds to Demat etc.
To the retail Customers these above services are further facilitated with Net
Banking, Phone Banking, Home Banking, ATM Network, Mobile Banking etc.
The Corporate Banking Division offers the Following:
• Current accounts
• Asset Reconstruction
• Trade Finance
• Treasury Products
• Investment Products
Trade Finance includes:
• Pre/post shipment credit

• Letter of Credit
• Bank Guarantee
• Bill and Invoice Discounting
Treasury Products handle
• Foreign Exchange Transaction

• Money Market (that includes Fixed Income and Derivative Solutions).

The Investment Products of the bank includes Term Deposits and Mutual Funds.
The Bank also offers services to the NRI Community. The Registered office of the
bank is in Mumbai. The Bank operates with 65 branches at 41 locations in the
Country.
COMPETITORS OF KOTAK MAHINDRA BANK
• State Bank Of India

• ICICI Bank
• Unit Trust Of India (UTI)
• HDFC Bank
• ABN Amro Bank
• HSBC etc.
ANALYSIS OF PRIMARY DATA

A sample of 50 people were collected and on the basis of that the following are the
conclusions drawn:-
FIG NO.1
AGE
12%
28%
14%
<30
<40
<50
>50
46%
INTERPRETATION 1:

28% - comes under the category of 21-30 age group

46% - comes under the category of 31-40 age group
14%- comes under the category of 41-50 age group
12%- comes under the category of 50 & above age group
The maximum people who were questioned comes under the category of 31-40 age
group i.e 46% & the minimum was 12% i.e people who were 50 & above.
FIG NO.2
OCCUPATION
6% 14%
36% STUDENT
BUSINESS
EMPLOYED
HOME-MAKER
44%
INTERPRETATION 2:
Out of the 50 people questioned 44% of the population comprises of Business class
which is the maximum then followed by 36%, 14%, & 6% who are employed
people, student & Home maker.
FIG NO.3

AWARENESS OF EQUITY MARKET
10%
YES
NO
90%
INTERPRETATION 3:
Out of the 50 people questioned 90% of the people were aware of the Equity
Market & 10% of the people were not aware of the Equity Market. It means that
maximum no. of people knows about the Equity Market.
FIG NO.4
INVESTMENT IN EQUITY MARKET
30%
YES
NO
70%
INTERPRETATION 4:

This fig shows that out of 100%, 70% of the population invest in Equity Market
whereas 30% of the population do not invest in Equity Market. In other words
most of the people are aware of Equity Market & therefore they invest in this
Market.
FIG NO. 5
INVESTMENT IN BANKS
42%
YES
NO
58%
INTERPRETATION 5:
58% of the people invest in Banking Sector whereas 42% of the people do not
invest in Banking Sector. This means that a little less than half the population do
not have interest in Banking Sector.

FIG NO.6
PERFORMANCE OF ICICI BANK
6% 4%
18%
EXCELLENT
GOOD
SATISFACTORY
AVERAGE
72%
INTERPRETATION 6:
72% of the population says that the performance of ICICI Bank is excellent,
18% says its good, 6% says its satisfactory & only 4% of the population says
that the performance is average. It means that most of the people have good
hopes with the performance of this Bank.
FIG NO. 7

PERFORMANCE OF KOTAK MAHINDRA BANK
10% 14%
26% EXCELLENT
GOOD
SATISFACTORY
AVERAGE
50%
INTERPRETATION 7:
14% - performance of Kotak Mahindra Bank is Excellent
50% - Good
26% - satisfactory
10% - says that the performance is average.
In other words ICICI Bank is ahead of Kotak Mahindra Bank & most of the
people would like to invest in ICICI Bank rather than investing in Kotak Mahindra
Bank.
FIG NO.8

COMPANY SELECTION
32%
PE BETTER PROFIT
SERVES THE CUSTOMER
68%
INTERPRETATION 8:
Out of 100% of the population, 32% of the people were of the opinion that the
Company which makes better profit is a better Company whereas 68% of the
population said that only those companies are better that serves the customer
better.
FIG NO.9
PREFERENCE OF PEOPLE
22%
MARKET SENTIMENTS
FINANCIAL PERFORMANCE
78%
INTERPRETATION NO 9:

Before investing in any company 22% of the people go by Market Sentiments

whereas 78% of the People go with the Financial Performance of the Company
which is very much Apt.
ANALYSIS OF SECONDARY DATA:

In the project the secondary data used is the Company’s Financial statement.
Financial Statement analysis can be a very useful tool for understanding a firm’s
performance and condition.
ANALYSIS OF ICICI BANK FOR THE YEAR
1. LIQUIDITY RATIOS:
2007 2006
(a). Current Ratio 0.62 0.62
The Current Ratio measures the ability of the firm to meet its current liabilities.
Higher the Current Ratio, the greater the short-term solvency. The general norm
For Current ratio in India is 1.33. Now here in this case Current Ratio for both the
Years are consistent i.e 0.62 which is less than the expected norm in India.
Therefore the bank cannot meet its current liability.
2007 2006
(b). Acid Test Ratio
2007 2006
(c). Cash Ratio 2.39 2.84

The Cash Ratio is the most stringent measure of liquidity. The Cash Ratio for the
year 2007 is 2.39 as compared to 2006 which is 2.84. Therefore, the ability of the firm to
meet its current liability is more in the year 2006 as compared to 2007.
2. LEVERAGE RATIOS:
2007 2006
(a). Debt-equity Ratio 9.346 7.319
The Debt-equity Ratio for the Year 2007 is 9.346 as compared to 7.319 for the Year 2006.
Since lower the Debt-equity ratio, higher will be the degree of protection enjoyed by the
creditors. Therefore the degree of protection enjoyed by the creditors will be more in the
year 2006 as compared to 2007.
2007 2006
(b). Debt-asset Ratio 0.90 0.88
The Debt-asset Ratio for the Year 2007 is 0.90 as compared to 0.88 for the Year 2006.
This Ratio measures the extent to which borrowed funds supports the firm’s assets. In
both the cases there is a slight difference in the Debt-asset Ratio.
2007 2006
(c).Interest Coverage Ratio 4.04 5.55
The Interest Coverage Ratio for the Year 2007 is 4.04 as compared to 5.55 for the Year
2006. This Ratio is higher in 2006 which means that the bank can easily meet its interest

burden even if profit before interest and taxes suffer a considerable decline as in 2006 the
profit before interest and taxes is lower as compared to 2007.
3. TURNOVER RATIOS:
2007 2006
(a). Fixed Asset Turnover 4.64 3.05
The Fixed Asset Turnover Ratio for the Year 2007 is 4.64 as compared to 3.05 for the
Year 2006. This ratio is used to measure the efficiency with which fixed assets are
employed. By comparing 2007 & 2006 ratios we can say that 2007 ratio indicates a high
degree of efficiency in asset utilization & 2006 ratio reflects inefficient use of assets.
2007 2006
(b). Total assets Turnover 0.39 0.32
The Total assets Turnover Ratio for the Year 2007 is 0.39 as compared to 0.32 for the
Year 2006. This Ratio basically tells us how efficiently the assets are employed, overall.
In 2007 the assets are employed more efficiently than 2006.
4. PROFITABILITY RATIOS:
2007 2006
(a). Gross Profit Margin Ratio 0.13 0.19

The Gross Profit Margin Ratio for the Year 2007 is 0.13 as compared to 0.19 for the Year
2006. This Ratio shows the margin left after meeting manufacturing cost. It basically
measures efficiency of production as well as pricing. Since the Profit margin of 2007 is
13% and of 2006 is 19%, the profit earned in 2006 ( 0.19) is comparatively higher than
the profit earned in 2007 (0.13).
2007 2006
(b). Net Profit Margin Ratio 0.105 0.144
The Net Profit Margin Ratio for the year 2007 is 0.105 as compared to 0.144 for the year
2006. This Ratio measures the overall efficiency of Production, Administration, Selling,
Financing, Pricing & Tax Management. Since the net profit margin for 2007 is 10.5% &
for 2006 is 14.4%, the Year 2006 has performed better as compared to the Year 2007.
2007 2006
(c). Return On Assets 0.246 0.255
The Return on Assets Ratio (ROA) for the Year 2007 is 0.246 as compared to 0.255 for
the Year 2006. Its an odd measure because its numerator measures the return to
shareholders (equity and preference) whereas its denominator represents the contribution
of all investors ( shareholders as well as lenders). The ROA for the Year 2006 is 25.5%
and is better as compared to 24.6% for the Year 2007.

2007 2006
(d). Earning Power 0.293 0.313
The Earning Power Ratio for the Year 2007 is 0.293 as compared to 0.313 for the Year
2006. This Ratio is a measure of business performance which is not affected by interest
charges and Tax burden. It focuses on Operating performance. Since the Earning power
ratio for the Year 2007 is 29.3% and for the Year 2006 is 31.3%, the Year 2006 has
performed better as compared to the Year 2007.
2007 2006
(e). Return on Capital 0.211 0.257
Employed
The Return on Capital Employed (ROCE) Ratio for the Year 2007 is 0.211 as compared
to 0.257 for the Year 2006. It’s a post-tax version of earning power. It Considers the
effect of taxation but not the capital structure. The ROCE for the Year 2007 is 21.1% as
compared to the ROCE of 2006 i.e 25.7%. Therefore, 2006 has performed better as
compared to 2007.
2007 2006
(f). Return On equity 0.246 0.228
The Return on equity for the Year 2007 is 0.246 as compared to 0.228 for the Year 2006.
This Ratio measures the profitability of equity funds invested in the firm. It’s a very
important measure as it reflects the productivity of ownership. 2007 figure reveals 24.6%

ROE as compared to 2006 figure i.e 22.8% which means that the return on equity in 2007
is comparatively higher than 2006.
DU PONT ANALYSIS:
ROA = NPM * TATR
0.10524* 0.38779= 0.040811
THE DU PONT is a popular tool of Financial Analysis. It provides an insight into the two
determinants of return on total assets i.e. net profit margin and Total assets turnover ratio.
SOME IMPORTANT RATIOS:
2007
1. BOOK VALUE PER SHARE 269.8
The Book Value per Share for the year 2007 is Rs.269.8. Company’s Book Value per
share is compared with the Market Share of the Company to see that whether the stock is
under or over priced. Now here in this case Book Value per Share is Rs.269.8 whereas the
Market Price is Rs. 734.65 as listed in BSE Stock exchange on 20thJun. Therefore, the
stock is OVER VALUED.
2007 2006
2. EARNING PER SHARE 4.33 3.82
The Earning Per Share of Kotak Mahindra in the year 2007 was 4.33 whereas in 2006 it
was 3.82. As we know that this ratio indicates the profitability of the firm, so here in this

case the profitability was more in 2007 as compared to 2006. In other words Company
was enjoying profit in the year 2007.
2007 2006
3. DIVIDEND PAYOUT RATIO 18.91 18.76
The Dividend Payout Ratio for the Year 2007 is 18.91 whereas for the Year 2006 is
18.76. If we compare both the Years we can see that there is a slight difference in the
Ratios of both the Years. In 2007 more earnings were there, so the company was able to
give more dividend to its shareholder as compared to the Year 2006.
2007
4. PRICE TO EARNING RATIO(P/E) 137.43
The Price to Earnings Ratio for the Year 2007 is 137.43( considering Market value of the
stock Rs.595.10 listed on the BSE Stock Exchange as on 20th June. This reflects the price
that the investors are willing to pay for every rupee of earnings per share.
ANALYSIS OF KOTAK MAHINDRA BANK FOR THE YEAR
1. LIQUIDITY RATIOS:
2007 2006
(a). Current Ratio: 0.32 0.24

The Current Ratio for the Year 2007 is 0.32 as Compared to 2006 which is 0.24. As we
already know that the Current Ratio in India is 1.33 which is less than the expected norm
in India. In both the cases bank will not be able to meet its current liability.
2007 2006
(b). Acid- Test Ratio 5.74 6.20
The Acid-Test Ratio for the Year 2007 is 5.74 as compared to 2006 which is 6.20. The
bank has the assets with itself which are highly liquid in the Year 2006 as compared to the
Year 2007.
2007 2006
(c). Cash Ratio
2. LEVERAGE RATIOS:
2007 2006
(a). Debt Equity Ratio 6.62 7.59
The Debt-equity Ratio for the Year 2007 is 6.62 as compared to 7.59 for the Year 2006.
Since lower the Debt-equity ratio, higher will be the degree of protection enjoyed by the
creditors. Therefore the degree of protection enjoyed by the creditors will be more in the
year 2007 as compared to 2006.
2007 2006
(b). Debt asset Ratio

(c). Interest Coverage Ratio 2007 2006
3. TURNOVER RATIOS:
2007 2006
(a). Fixed Assets Turnover 5.82 4.43
The Fixed Assets Turnover Ratio for the Year 2007 is 5.82 as compared to 4.43 for the
Year 2006. This ratio is used to measure the efficiency with which fixed assets are
employed. By comparing 2007 & 2006 ratios we can say that 2007 ratio indicates a high
degree of efficiency in asset utilization & 2006 ratio reflects inefficient use of assets.
2007 2006
(b). Total Assets Turnover
4. PROFITABILITY RATIOS:
2007 2006

(a). Gross Profit Margin Ratio 12.35 18.87
The Gross Profit Margin Ratio for the Year 2007 is 12.35 as compared to 18.87 for the
Year 2006. This Ratio shows the margin left after meeting manufacturing cost. It basically
measures efficiency of production as well as pricing. Since the Profit margin of 2007 is
12.35% and of 2006 is 18.87%, the profit earned in 2006 is comparatively higher than the
profit earned in 2007.
2007 2006
(b). Net Profit Margin Ratio 8.84 12.97
The Net Profit Margin Ratio for the year 2007 is 8.84 as compared to 12.97 for the year
2006. This Ratio measures the overall efficiency of Production, Administration, Selling,
Financing, Pricing & Tax Management. Since the net profit margin for 2007 is 8.84% &
for 2006 is 12.97%, the Year 2006 has performed better as compared to the Year 2007.
2007 2006
(c). Return On Assets 0.00939 0.00785
The Return on Assets Ratio (ROA) for the Year 2007 is 0.00939 as compared to 0.00785
for the Year 2006. Its an odd measure because its numerator measures the return to
shareholders (equity and preference) whereas its denominator represents the contribution
of all investors ( shareholders as well as lenders). The ROA for the Year 2007 is 0.93%
and is better as compared to 0.78% for the Year 2006.
2007 2006
(d). Earning Power 0.059 0.034
The Earning Power Ratio for the Year 2007 is 0.059 as compared to 0.034 for the Year
2006. This Ratio is a measure of business performance which is not affected by interest

charges and Tax burden. It focuses on Operating performance. Since the Earning power
ratio for the Year 2006 is 3.4% and for the Year 2007 is 5.9%, the Year 2007 has
performed better as compared to the Year 2006.
2007 2006
(e). Return On Capital
Employed
2007 2006
(f). Return On Equity 0.173 0.277
The Return on equity for the Year 2007 is 0.173 as compared to 0.277 for the Year 2006.
This Ratio measures the profitability of equity funds invested in the firm. It’s a very
important measure as it reflects the productivity of ownership. 2007 figure reveals 17.3%
ROE as compared to 2006 figure i.e 27.7% which means that the return on equity in 2006
is comparatively higher than 2007.
SOME IMPORTANT RATIOS:
2007 2006
1. BOOK VALUE PER SHARE 99.12 72.65
The Book Value per Share for the year 2007 is Rs.99.12 whereas for the year 2006 is
Rs.72.65. Company’s Book Value per share is compared with the Market Share of the

Company to see that whether the stock is under or over priced. Now here in this case for
the Year 2007 Book Value per Share is Rs.99.12 whereas the Market Price is Rs. 595.10
as listed in BSE Stock exchange on 20thJun. Therefore, the stock is OVER VALUED.
2007 2006
2. EARNING PER SHARE 4.33 3.82
The Earning Per Share of Kotak Mahindra in the year 2007 was 4.33 whereas in 2006 it
was 3.82. As we know that this ratio indicates the profitability of the firm, so here in this
case the profitability was more in 2007 as compared to 2006. In other words Company
was enjoying profit in the year 2007.
2007 2006
3. DIVIDEND PAYOUT RATIO 18.91 18.76
The Dividend Payout Ratio for the Year 2007 is 18.91 whereas for the Year 2006 is
18.76. If we compare both the Years we can see that there is a slight difference in the
Ratios of both the Years. In 2007 more earnings were there, so the company was able to
give more dividend to its shareholder as compared to the Year 2006.
2007
4. PRICE TO EARNING RATIO (P/E) 137.43
The Price to Earnings Ratio for the Year 2007 is 137.43( considering Market value of the
stock Rs.595.10 listed on the BSE Stock Exchange as on 20th June. This reflects the price
that the investors are willing to pay for every rupee of earnings per share.

COMPARISON WITH INDUSTRY:
Industry Ratio ICICI Ratio Kotak Ratio
Quick Ratio 2.05times 5.74times
Current Ratio 2.16times 0.62times 0.32times
Debt Equity Ratio 1.53 9.35 6.62
Interest Coverage Ratio 1.28 4.04
ROCE 6.64% 0.211%
P/E 11.60 137.43
BookValue 238291.15 99.12
INTERPRETATIONS:
1. Quick Ratio:- The Quick Ratio or the Acid Test Ratio for the Banking Industry is 2.05
times and the Kotak bank Ratio is 5.74 times which indicates that The bank has the assets
with itself which are highly liquid in the nature. This ratio also indicates that Kotak Bank
is having enough liquid cash inorder to meet its current liabilities. Therefore this Ratio is
a good Indicator for the Kotak Bank.

2. Current Ratio:- The Current Ratio For the Banking Sector is 2.16 times whereas for
ICICI Bank & for Kotak Mahindra Bank its 0.62times & 0.32 times both of which is less
than the Industry Ratio. Since the General Norm for current ratio in India is 1.33.
Therefore, both the Banks are not performing well keeping banking Industry as a
Benchmark.
3. Debt Equity Ratio:- The Debt Equity Ratio for the Industry is 1.53. The Debt Equity
Ratio Of ICICI Bank and Kotak Mahindra Bank are 9.35 and 6.62. It means that Both the
Banks are Exposed to a large amount of Debt. This is certainly not a good Ratio because a
debt Equity ratio which is 2 or more than 2 would expose the Company to Risk such as
Interest Rate increase & also this will further result in the nervousness of the Creditor.
4. Interest Coverage Ratio:- The Interest Coverage Ratio for the Banking Industry is
1.28 whereas for ICICI Bank it is 4.04. This means that ICICI Bank can easily meet its
Interest Expenses because the interest Coverage Ratio which is 1.5 or lower cannot meet
their Interest Expenses.
5. Return On Capital Employed:- The Return On Capital Employed for the Banking
Industry is 6.64% whereas for ICICI Bank it is 0.211%. Now here in this case ROCE of
ICICI Bank is less than the Industry Ratio. If the ROCE is less than the rate at which the
Company borrows then shareholders will face the problem.
6. Price to Earnings Ratio (P/E):- The Price to Earnings Ratio For the Banking Industry
is 11.60 whereas for Kotak Mahindra Bank it is 137.43. It means that Investors are
Expecting higher Earnings Growth when the Company’s P/E is high as Compared to the
Companies whose P/E Ratio is less.
FINDINGS

• Maximum people Questioned were of the Age Group of 31-40 and were
belonging to Business Class.
• 90% Of the Population were aware of Equity Market & more than half of
the population invested in Equity market.
• 58% of the Population invested in Banking Sector whereas 42% didn’t show
any interest in this Sector
• 72% of the Population says that the performance of ICICI Bank is Excellent
whereas only 4% says that it is Average.
• 14% says that the performance of Kotak Mahindra Bank is Excellent
whereas 10% says that its average.
• 32% of the population is of the opinion that the Company which makes
better profit is a better Company whereas 68% says Company that serves
the Customer better is a better Company.
• Before Investing in Equity Market 22% of the people go by Market
Sentiments whereas 78% of the people go by the Financial Performance of
the Company.
• Current Ratio of ICICI Bank for the Year 2007 as well as 2006 is 0.62
• Current Ratio of Kotak Mahindra Bank for the Year as Year 2007 is 0.32
and for 2006 is 0.24
• Quick Ratio for Kotak Bank for the Year 2007 is 5.74 and for the Year 2006
is 6.20
• Debt Equity Ratio for the ICICI Bank for the Year 2007 is 9.35 and for the
Year 2006 is 7.31
• Debt Equity Ratio for Kotak Bank for the Year 2007 6.62 and for 2006 is
7.59
• Interest Coverage Ratio for ICICI Bank for the Year 2007 is 4.04 and for
the Year 2006 is 5.55

• Bookvalue for ICICI & Mahindra for the Year 2007 is found to be 269.8 &
99.12
• EPS for Kotak For the Year 2007 & 2006 is 4.33 & 3.82
• Dividend Payout Ratio for Kotak for the Year 2007 & 2006 is 18.91 &
18.76
• P/E for Kotak for the Year 2007 is found to be 137.43
RECOMMENDATIONS

• Quick Ratio of both the Companies should be high enough because Quick Ratio
indicates that the Company is having enough liquid cash to meet its current
liabilitis. Since the Industry Ratio of banking sector is 2.05 we can say that both
the companies are performing.
• Current Ratio is a very Important Ratio in any Company. Now here in this case the
current liability of ICICI as well as Kotak is 0.62 & 0.32 times which is less than
the current ratio right now prevailing in India. So inorder to keep the pace with the
Industry the current ratio should be somewhere near 1 or little more than 1.
• If we notice both ICICI Bank and Kotak Mahindra Bank are exposed to large amt
of debt. This is certainly not a good Ratio because a debt Equity ratio which is 2 or
more than 2 would expose the Company to Risk such as Interest Rate increase &
also this will further result in the nervousness of the Creditor. Therefore, One way
to improve their situation would be to issue more debt and use cash to buyback
some of its outstanding shares.
• The lower the ratio, the more the company is burdened by debt expense. When a
company's interest coverage ratio is 1.5 or lower, its ability to meet interest
expenses may be questionable. An interest coverage ratio below 1 indicates the
company is not generating sufficient revenues to satisfy interest expenses.
Therefore Interest Coverage ratio of both the Companies are better.
• If the ROCE is less than the rate at which the Company borrows then shareholders
will face the problem. Therefore ROCE should not be less.
• Company’s P/E Ratio should always be higher because Investors expect a higher
Earnings growth when the Company’s P/E is high. Here the Company is having a
good P/E ratio. Therefore, the Investors can reap the benefit of the Company.
CONCLUSIONS

• Most of the people like to invest in the Equity Market because it involves
less amount of Risk.
• The Overall performance of ICICI Bank is good if the Comparison is made

with the Industry Average.
• The Overall Performance Of Kotak Mahindra Bank is good but not as good
as the performance of ICICI bank.
• The Current Ratio Of ICICI bank is higher than the Current Ratio of Kotak
Mahindra bank which reflects that ICICI Bank is ahead of Kotak Mahindra
Bank.
• ICICI Bank is exposed to more amount of Risk as compared to Kotak

Mahindra Bank as the Debt equity Ratio of ICICI is higher than Kotak
Mahindra.
• ICICI Bank can easily meet its interest expenses because a high ratio
indicates the firm can meet its interest expenses in a better way.
• ROCE for ICICI Bank is underpriced when compared to the Industry

Average as the Industry average is 6.64% whereas ICICI Bank’s ROCE is
0.211%.
• P/E Ratio should always be higher. Now here in this case Industry average
P/E is 11.60 whereas P/E for Kotak Mahindra is 137.43. Therefore, it is
over priced.
LIMITATIONS OF THE STUDY:

• The complete picture of movement of stocks cannot be analyzed because

technical analysis is not undertaken.
• The study is restricted only to two companies. Thus the complete overview
of the industry cannot be done.
• The duration to understand and study this vast subject of Fundamental
analysis is very less.
BIBLIOGRAPHY:-
1. Book By Prasanna Chandra

2. Company’s Database.


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Reliance Money Limited

SUMMER INTERNSHIP PROJECT

In Partial Fulfillment of requirements of

Under special guidance of

MATS School Of Business and IT

MATS School Of Business and IT

PARTICULARS Page No.

MATS School Of Business and IT

MATS School Of Business and IT

INTRODUCTION TO THE STUDY

Two Analytical Models

1. Fundamental Analysis:- It maintains that markets may misprice a security

MATS School Of Business and IT

Summary of Fundamental analysis

MATS School Of Business and IT

OBJECTIVE OF THE STUDY:

• To understand the practical application of tools of Fundamental analysis.

- The survey was done through primary and secondary data.

MATS School Of Business and IT

MATS School Of Business and IT

1. [Author: Salcedo, Yesenia

2. [ Author: Giner, Begona, Reverte, Carmelo;

This article analysis the relevance of accounting Fundamentals to inform

MATS School Of Business and IT

In other words, Cost of Equity Capital is a very important tool for

3. [Author: Shaw, Stuart

The article focuses on the Fundamental factor considered in Company Stock

4. [Article: Walking the Fundamental Analysis Talk.

The article provides an overview of the use of Fundamental Analysis by

5. [ Article: Explaining Fundamental analysis

The article provides information about Fundamental Analysis. It is the

6. [Author: Eldomiaty, Tarek Ibrahim, Chong Ju Choi

MATS School Of Business and IT

Article: Do Informativeness of Co-Integrated Financial

This article examines the informativeness of Fundamental financial

Proceedings of the Project:

The project is basically on Equity Research that is pertaining to the Fundamental

1. Liquidity Ratios:- Liquidity refers to the ability of a firm to meet its

MATS School Of Business and IT

(c). Cash Ratio:- This is also a measure of Liquidity.

Debt Equity Ratio= Debt /Equity

Debt Asset Ratio= Debt / asset

Interest Coverage Ratio= Profit before interest & Taxes / Interest

Net Sales / Average Net Fixed Assets

Net Sales / Average Total assets

4. Profitability Ratios:- This Ratio reflects the final result of Business

MATS School Of Business and IT

Gross Profit / Net Sales

Net Profit / Net sales

(c).Return On Assets:- ROA is an odd measure because its numerator

Profit after tax / Average Total Assets

(d). Earning Power:- It’s a measure of business performance which is not

Profit before Interest & tax / Average Total Assets

(e). Return On Capital Employed:-It is the post-tax version of Earning

(f). Return On Equity:-This Ratio is a great interest to equity shareholders. It

Equity Earnings / Average Equity

5. Book Value per Share:- The Value at which an asset is carried on a

MATS School Of Business and IT