PROJECT REPORT

ON

A STUDY ON A FINANCIAL PERFORMANCE ANALYSIS OF

PRIVATE BANKS IN INDIA

BY

SHRISHA SHARMA

ROLL NO-21MS1016

UNDER THE GUIDANCE OF

DR. ROHIT BANSAL

ASSISTANT PROFESSOR

DEPARTMENT OF MANAGEMENT STUDIES

RAJIV GANDHI INSTITUTE OF PETROLEUM

TECHNOLOGY,

JAIS, AMETHI,

UTTAR PRADESH, 22930

TABLE OF CONTENT

1. FINANCIAL ANALYSIS
2. INDUSTRY INFORMATION
3. ABOUT THE BANKS
4. KEY FINANCIAL RATIOS
5. TABLES REPRESENTING THE BALANCE SHEET PROFIT LOSS

STATEMENT REQUIRED FOR FINANCIAL ANALYSIS

6. GRAPHICAL ANALYSIS
7. CONCLUSION
8. REFERENCES
FINANCIAL ANALYSIS

It is a method of analysing a company's current state using various financial instruments, such
as ratios and values connected to finance, business, and investment, or a group of companies
to build some sort of comparison in order to determine their growth. It may be done by
analysing the income statement, cash flow statement, and balance sheet, and with this
information, we can calculate several ratios that provide an accurate image of the company.
Basically, financial analysis is done for determining the current situation of firm it is used in,
it can answer what type of financial practises a firm should follow, as well as provide ideas
on distinct sectors within production and distribution to which a firm should pay close
attention, such as marketing, distribution, production, inventory consumption, pricing, and
retailing. Financial analysis is performed to uncover financial loopholes that must be rectified
in order to optimise a company's profit. Generally financial analysis is done by calculating
different ratios. Ratio is nothing but a mathematical tool that establishes a link between
business values. For example, a current ratio establishes a relationship between current assets
and current liabilities, and these ratios can be used to characterise an entity's condition as well
as to compare one market player to others in the same area. Financial analysis gives rough
idea to company about the policies and strategy which there, competitors are following, and
adjustments to the company's existing framework are required. It also gives shareholders'
debentures, the general public, parliamentarians, and tax officials an understanding of the
company's current financial condition, as well as an idea of its market-share and financial
condition.

INDUSTRY INFORMATION-

In addition to cooperative credit institutions, the Indian banking system includes 12 public
sector banks, 22 private sector banks, 44 foreign banks, 43 regional rural banks, 1,484 urban
cooperative banks, and 96,000 rural cooperative banks. The total number of ATMs in India
climbed to 214,654 in May 2021.
As of July 16, 2021, the RBI reported that bank credit totalled Rs. 108.79 trillion (US$ 1.46
trillion) and bank deposits totalled Rs. 155.14 trillion (US$ 2.08 trillion). As of July 16, 2021,
credit to non-food industries was Rs. 107.93 trillion (US$ 1.45 trillion).
The assets of public sector banks totalled Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20.
In FY20, total assets in the banking sector (public, commercial, and foreign banks) climbed
to US$ 2.52 trillion.

Indian banks are progressively emphasising the use of an integrated risk management
approach. The recovery of commercial banks' NPAs (non-performing assets) reached Rs.
400,000 crore (US$ 57.23 billion) in FY19, the highest in the prior four years.

ABOUT THE BANKS

HDFC BANK

THE MOTTO OF HDFC BANK IS - We Understand Your World

The Housing Development Finance Corporation Limited, or HDFC, was one of the first
financial institutions in India to acquire Reserve Bank of India (RBI) "in principle" clearance
to open a private sector bank. This was done in 1994 as part of the RBI's strategy of
liberalising the Indian banking system.

HDFC Bank was founded in August 1994 under the name HDFC Bank Limited and has its
headquarters in Mumbai, India. In January 1995, the bank began operations as a Scheduled
Commercial Bank.

The Bank had a nationwide distribution network of 5,653 branches and 16,291 ATMs in
2,917 cities/towns as of March 31, 2021.
HDFC Bank is one of India's top private banks, having been one of the first to acquire
Reserve Bank of India (RBI) authorisation to open a private sector bank in 1994.

HDFC Bank now has 5,653 branches and 16,291 ATMs spread over 2,917 cities and towns.

ICICI BANK

THE MOTTO OF ICICI BANK IS- Khayal Apka

ICICI Bank is India's largest private sector bank. At September 30, 2020, the Bank's
consolidated total assets were Rs. 14.76 trillion. ICICI Bank now has 5,288 branches and
14,040 ATMs in India.
The World Bank, the Government of India, and leaders from Indian business came together
to form ICICI in 1955. The main goal was to establish a development financial institution that
would provide medium- and long-term project funding to Indian companies. ICICI largely
centred its business on project finance until the late 1980s, providing long-term funds to a
variety of industrial ventures. With the liberalisation of India's financial sector in the 1990s,
ICICI transformed its business from a development financial institution that only provided
project finance to a diversified financial services provider that, along with its subsidiaries and
other group companies, provides a wide range of financial services.
As India's economy became more market-oriented and integrated with the global economy,
ICICI took advantage of new chances to offer a greater range of financial goods and services
to a wider range of customers. As part of the ICICI group, ICICI Bank was founded in 1994.
ICICI became the first Indian corporation and the first non-Japanese Asian bank or financial
institution to be listed on the New York Stock Exchange in 1999.

AXIS BANK

THE MOTTO OF AXIS BANK IS- Badhti Ka Naam Zindagi

In India, Axis Bank is the third largest private sector bank. The Bank caters to a wide range
of customer groups, including large and mid-sized businesses, small and medium-sized
businesses, agriculture, and retail businesses.
As of March 31, 2021, the Bank had 4,594 domestic branches (including extension counters),
11,333 ATMs, and 5,710 cash recyclers dispersed across the country. As of March 31, 2021,
the bank had 6 Virtual Centres and around 1500 Virtual Relationship Managers. The Bank's
overseas operations are dispersed among eight worldwide offices, including branches in
Singapore, Dubai (at DIFC), and Gift City-IBU, as well as representative offices in Dhaka,
Dubai, Abu Dhabi, and Sharjah, and an Overseas subsidiary in London, United Kingdom.
Corporate Lending, Trade Finance, Syndication, Investment Banking, and Liability
Businesses are the focus of the foreign operations.
In 1994, Axis Bank became one of the first new generation private sector banks to open its
doors. Specified Undertaking of Unit Trust of India (SUUTI) (then known as Unit Trust of
India), Life Insurance Corporation of India (LIC), General Insurance Corporation of India
(GIC), National Insurance Company Ltd., The New India Assurance Company Ltd., The
Oriental Insurance Company Ltd., and United India Insurance Company Ltd. collaborated to
establish the bank in 1993. The Unit Trust of India's shareholding was later transferred to
SUUTI, a company founded in 2003.
Axis Bank has maintained sustained growth, having a balance sheet of Rs. 9,96,118 crores as
of March 31, 2021.

IDBI BANK

THE MOTTO OF IDBI BANK IS- Banking For All

Aao Sochein Bada

Bank Aisa Dost Jaisa

IDBI Bank Ltd., today, is operating as a full service universal bank that serves the customers
from all segments.

IDBI Bank Ltd. has inherited a rich legacy from its predecessor entity - Industrial
Development Bank of India – which was an apex Development Financial Institution (DFI) in
the realm of industry from July 1, 1964 to September 30, 2004. As a DFI, the erstwhile IDBI
stretched its canvas beyond mere project financing to cover an array of services that
contributed towards balanced geographical spread of industries, development of identified
backward areas, emergence of a new spirit of enterprise and evolution of a deep and vibrant
capital market.

On October 1, 2004, the erstwhile IDBI was converted into a banking company – IDBI Ltd. -
to undertake the entire gamut of banking activities while continuing to play its secular DFI
role. Desirous of fuelling its business growth, IDBI Ltd. merged its subsidiaries - the
erstwhile IDBI Bank, IDBI Home Finance Ltd., IDBI Gilts, the erstwhile United Western
Bank Ltd., with itself over a period of time. IDBI Ltd. also changed its name to IDBI Bank
Ltd. to reflect its widened business functions.

As an universal bank, IDBI Bank Ltd. touches the lives of millions of Indians through a wide
array of banking products and services. Besides, the Bank has an established presence in
associated financial sector businesses including capital market, investment banking and
mutual fund business. The Bank’s very business philosophy is characterised by the
commitment to provide relevant financial solutions, ensure maximum customer convenience
through easy access to branches and ATMs as well as digital offerings and excellence in
customer service.

Going forward, IDBI Bank is strongly committed to work towards emerging as ‘most
preferred and trusted bank enhancing value for all stakeholders’.

KOTAK MAHINDRA BANK

THE MOTTO OF KOTAK MAHINDRA BANK IS- Let’s Make Money Simple

Ab Kona Kona Kotak

In 1985, Uday Kotak founded what later became an Indian financial services conglomerate.

 In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the group's flagship company,
[6]
received a banking licence from the Reserve Bank of India. With this, KMFL became the
first non-banking finance company in India to be converted into a bank.

In a study by Brand Finance Banking 500 published in February 2014 by Banker magazine,

KMBL was ranked 245th among the world's top 500 banks with a brand valuation of
around US$481 million and brand rating of AA+.

Kotak Mahindra Bank Limited is an Indian banking and financial services company

headquartered in the city of Mumbai, India. It offers banking products and financial services
for corporate and retail customers in the areas of personal finance, investment banking, life
insurance, and wealth management. As of February 2021, the bank has 1600 branches and
2519 ATMs.

KEY FINANCIAL RATIOS

Financial analysis is performed to evaluate the financial health or financial condition of a
firm
this analysis uses five different sets of ratios.
1. LIQUIDITY RATIO- It describes companies potential to pay short-term debt or loan. It
also describes the amount of liquid asset available to settle short- term debt.
2. PROFITABILITY RATIO- It describes the potential of companies to deduce earning
related to its investment and assets.
3. ACTIVITY RATIO- This ratio defines or measure company’s potential to change
different elements of balance-sheet into current asset or sales for profit. It also shows how
expeditiously a firm is handling its assets.
4.ASSET TURNOVER RATIO OR MANAGEMENT-Asset turnover ratio is defined
as how expeditiously the firm is using their asset or non-current asset to generate profit from
the production of goods.
5.LONG TERM DEBT OR LEVERAGE RATIO-LEVERAGE RATIO- It is a key
financial ratio Which show how much companies are depending on its debt what is the level
of company’s operation are financed with debt in comparison with equity.

Alongside this we also need to calculate DuPont analysis

LIQUIDITY RATIOS
 CURRENT RATIO
Current ratio is a type of liquidity ratio that describes company’s potential to pay short-term
borrowing or debt which need to be settled within the year. It is comparison between current
assets and current liabilities the ideal value is 2 but ratio between 1.5 to 3 is highly
acceptable.
Current Ratio = Current assets / Current liabilities.
 QUICK RATIO OR ACID TEST RATIO
Quick ratio is also a type of liquidity ratio it further simplifies the concept of liquidity for
firms.
that it shows the availability of liquid assets say cash to pay the short-term loans.
Quick Ratio =current assets – (cash and equivalents + marketable securities + accounts
receivable) / current liabilities.
PROFITABILITY RATIOS
 RETURN ON ASSETS
It is one of the profitability ratios which shows the amount of revenue that company has
generated by utilizing different sets of assets that’s why it is called as return on asset.
Net Income / Avg. total assets
 RETURN ON SHAREHOLDER’S EQUITY
Return on shareholder’s equity is also profitability ratio which show return that investor is
getting on his/her investment it shows how efficiently companies is managing its investment
to increase profitability.
RONW = Net Income / Shareholder’s Equity.
 PROFIT MARGIN
It is a relation between PAT and NET SALES of companies it indicates the amount of
revenue or profit companies is getting on their operations for the period.
Net Income or Net Profit / Net Sales
 MARKET PRICE TO BOOK VALUE
Market price to book value ratio is a comparison between market price to book value it
basically
compares the cost of stocks to the value of the company if it was broken up and sold today.
Market price to book value = Market price of share/Book value
 PRICE EARNING RATIO
Price earnings ratio is constantly used by buyer, stock trader and investors to determine the
value of stocks of an entity. If the value of price earnings ratio is high that shows future
growth
prospects of a company.
Price earnings ratio =Market price per share / Earning per share
 EARNINGS PER SHARE
EPS is type of profitability ratio which indicate the growth in earning per share are amount of
revenue of company is increased for each share. As investor and buyers are highly interested
in a company with high value of EPS is calculated as:
EPS= Earning available / No. of share issued to shareholders
ACTIVITY OR TURNOVER RATIOS
 INVENTORY TURNOVER RATIO
It indicates how efficiently the inventories or supplies are exchanged by company over a
fixed
tenure it indicates number of time average inventories are sold during the fixed tenure. It is
calculated as:
Inventory turnover ratio = Cost of goods sold / Average inventory
Average no of days inventor remains in stock
As from the name suggest it describe the time taken by company to sold his goods and
products
means that higher the value of this indicated that companies do not have efficient channel or
we can say that companies is not using distribution network efficiently to increase their sale.
A
company is not focusing on innovation.
Average no of days inventory in stock= 365/inventory turnover ratio
 DEBTOR TURNOVER RATIO
It explains how expeditiously company is handling its credits if the value of debtor’s turnover
ratio is low that means company is following a efficient policies for collection of their credits
from consumers.
Debtor turnover ratio = Credit sales / Average debtors.
 WORKING CAPITAL TURNOVER
It indicates how expeditiously an entity is utilizing its working capital to enhance the sales of
company. It shows how efficiently company is spending on its production and distribution
process to generate good sales and profit
Working capital turnover = Sales / Working capital
Assets Turnover or Management Ratio
 FIXED ASSET TURNOVER
It shows how expeditiously a firm is utilizing its long-term asset say fixed assets to produce
revenue. Higher the fixed asset turnover then it indicates that firm is expeditiously handling
its
long-term asset to generate assets to generate sales. It is calculated by-
Fixed Asset Turnover= Net Sales/ Fixed Assets
Long-term Debt or Leverage ratios
 DEBT TO EQUITY
It explains the level at which companies is using its debt with respect to its equity to execute
its operations. So, it tails about the availability of investor’s funds to manage the outstanding
borrowing during the time of unexpected condition.
Debt to equity = Long term debt or liabilities / Total equity
 INTEREST COVERAGE
Interest coverage ratio is profitability ratio in one sense and debt ratio in one sense it explains
the condition of entity that with what easiness companies is going to pay its interest on the
debt this ratio is used by creditor buyer lenders determine the risk companies is going to face
in future.
Interest coverage ratio = EBIT/INTEREST EXPENSE
DuPONT ANALYSIS
Dupont analysis is method of financial analysis firstly prepared by corporation named as
DuPont in a year 1920. It basically calculates and re-evaluate return on equity, total asset
turnover and profit margin it basically tries to explain the way through which organization
tries actually enhance the return on equity. It really helps the buyer or shareholder to identify
the most profitable activity in the organization.

Dupont analysis = Profit after tax / Total assets.

TABLES REPRESENTING THE BALANCE SHEET PROFIT LOSS
STATEMENT REQUIRED FOR FINANCIAL ANALYSIS
BALANCE- SHEET, PROFIT-LOSS STATEMENT, FINANCIAL RATIO DUPONT
ANALYSIS OF HDFC BANK
It shows the results of different financial ratio of HDFC Bank from 2017 to 2021 it includes
liquidity ratio current and quick ratio than profitability ratio under this sub-heading we have
return on assets, return on shareholder’s equity earnings per share and price earnings ratio as
well as profit margin after this the table shows the activity ratio which include inventory
turnover ratio average no of days inventory remain in stocks debtors turnover ratio and
working capital turnover ratio after this table represents assets turnover ratio which includes
fixed assets turnover ratio it is follows by leverage ratio which include debt to equity and
interest coverage and at the end we have DuPont analysis that shows return on total assets .
BALANCE SHEET, PROFIT-LOSS STATEMENT, FINANCIAL RATIO & DUPONT
ANALYSIS OF ICICI BANK
It shows the results of different financial ratio of ICICI Bank from 2017 to 2021 it includes
liquidity ratio current and quick ratio than profitability ratio under this sub-heading we have
return on assets return on shareholder’s equity earnings per share and price earnings ratio as
well as profit margin after this the table shows the activity ratio which include inventory
turnover ratio average no of days inventory remain in stocks debtors turnover ratio and
working capital turnover ratio after this table represents assets turnover ratio which includes
fixed assets turnover ratio it is follows by leverage ratio which include debt to equity and
interest coverage and at the end we have DuPont analysis that shows return on total assets .

BALANCE SHEET, PROFIT-LOSS STATEMENT, FINANCIAL RATIO & DUPONT

ANALYSIS OF AXIS BANK
It shows the results of different financial ratio of Axis Bank from 2017 to 2021 it includes
liquidity ratio current and quick ratio than profitability ratio under this sub-heading we have
return on assets return on shareholder’s equity earnings per share and price earnings ratio as
well as profit margin after this the table shows the activity ratio which include inventory
turnover ratio average no of days inventory remain in stocks debtors turnover ratio and
working capital turnover ratio after this table represents assets turnover ratio which includes
fixed assets turnover ratio it is follows by leverage ratio which include debt to equity and
interest coverage and at the end we have DuPont analysis that shows return on total assets .

BALANCE SHEET, PROFIT-LOSS STATEMENT, FINANCIAL RATIO & DUPONT

ANALYSIS OF IDBI BANK
It shows the results of different financial ratio of IDBI Bank from 2017 to 2021 it includes
liquidity ratio current and quick ratio than profitability ratio under this sub-heading we have
return on assets return on shareholder’s equity earnings per share and price earnings ratio as
well as profit margin after this the table shows the activity ratio which include inventory
turnover ratio average no of days inventory remain in stocks debtors turnover ratio and
working capital turnover ratio after this table represents assets turnover ratio which includes
fixed assets turnover ratio it is follows by leverage ratio which include debt to equity and
interest coverage and at the end we have DuPont analysis that shows return on total assets .

BALANCE SHEET, PROFIT-LOSS STATEMENT, FINANCIAL RATIO & DUPONT

ANALYSIS OF KOTAK MAHINDRA BANK
It shows the results of different financial ratio of Kotak Mahindra Bank from 2017 to 2021 it
includes liquidity ratio current and quick ratio than profitability ratio under this sub-heading
we have return on assets return on shareholder’s equity earnings per share and price earnings
ratio as well as profit margin after this the table shows the activity ratio which include
inventory turnover ratio average no of days inventory remain in stocks debtors turnover ratio
and working capital turnover ratio after this table represents assets turnover ratio which
includes fixed assets turnover ratio it is follows by leverage ratio which include debt to equity
and interest coverage and at the end we have DuPont analysis that shows return on total
assets .
GRAPHICAL ANALYSIS

1. LIQUIDITY RATIO OF HDFC RATIOS

2. LIQUIDTY RATIOS OF ICICI RATIOS

3. LIQUIDTY RATIOS OF AXIS BANK

4. LIQUIDITY RATIOS OF IDBI BANK

5. LIQUIDITY RATIOS OF KOTAK MAHINDRA BANK

PROFITABILITY RATIOS
1. PROFITABILITY RATIOS OF HDFC BANK

2. PROFITABILITY RATIOS OF ICICI BANK

3. PROFITABILITY RATIOS OF AXIS BANK

4. PROFITABILITY RATIOS OF IDBI BANK

5. PROFITABILITY RATIOS OF KOTAK MAHINDRA BANK
CONCLUSION
On critical comparison of the five banks in the banking Sector, I have come to
conclusion that, all the five companies have varying level of performance
throughout the different five years (2017-2021). From the comprehensive analysis
of the various financial ratios of HDFC Bank, ICICI Bank, Axis Bank, IDBI Bank
and Kotak Mahindra Bank showed a continuous variation in magnitude of its
different Ratios (as can be observed from the values listed in above Tables and
graphs) over the given period of time (2017-2021). Based on these comprehensive
analyses of the various financial ratios, it can state the following facts:
IDBI Bank exhibited the highest value of current ratio in the year 2018 (Current
Ratio = 2.686) while Kotak Mahindra exhibited the lowest value in the year 2017
(Current Ratio = 0.863). Besides these two extremities all the companies showed a
continuous variation of low magnitude of its current ratio (as can be observed
from the values listed in above table) over the given period. IDBI Bank exhibited
the highest value of quick ratio in the year 2018 (Quick Ratio = 2.686) while the
Kotak Mahindra Bank exhibited the lowest value in the year 2017 (Quick Ratio =
0863). Besides these two extremities all the companies showed a continuous
variation of low magnitude of its quick ratio (as can be observed from the values
listed in above Table) over the given period. Kotak Mahindra Bank exhibited the
highest value of price earnings ratio in the year 2017 (Price Earnings Ratio =
31.647) while the HDFC Bank exhibited the lowest value in throughout the year
2019 (Price Earnings Ratio = 17.680). Besides these two extremities all the
companies showed a continuous variation of low magnitude of its Price Earnings
ratio (as can be observed from the values listed in above Table) over the given
period of time. So, we can say that all the companies should try to use their assets
to maximum in order to generate more earnings.
REFERENCES
 https://www.hdfcbank.com/
 https://www.icicibank.com/
 https://www.axisbank.com/
 https://www.idbibank.in/
 https://www.kotak.com/