Literature Review

Ken little, (1994) defined “fundamental analysis as the practice of looking at a business at its

most basic or fundamental financial level. This type of analysis examines key ratios of a

business to determine its financial health and gives you an idea of the value of the stock. The

goal is to determine the current worth and more importantly, how the market values the stock.

In this article he is also saying that return on equity (ROE) is one measure of how efficiently

a company uses its asset to produce earnings.” (Menezes, 2005), said the investors may use

either fundamental analysis or technical analysis or combine both. For example, as many

fundamental investors use technical analysis to decide entry and exit points, some technical

investors use fundamentals to restrict their portfolios, only to “good and financially healthy

companies”

Shikha Gupta(2021) in her study focused on analysing and comparing the Financial

Performance of ICICI Bank and offer suggestions for the improvement of efficiency in the

bank. After the study of the components of current assets, current liabilities and the

trends of working capital, it was found that the liquidity position of the bank is not so

good and the bank has to take an appropriate measure to keep current ratio and Quick

ratio on par with the norms. The NPAs of the ICICI bank is high and the bank should take

proper measures to control the NPAs so that it doesn’t affect the asset quality in long run.

The earning per share is however long standing which indicates continuous improvement in

the earning power of the bank but proper control over leverage should be taken in order

to magnify DP ratio.

Anthony C.Greig (1989) in his paper, stated fundamental analysis discovers equity values

not currently reflected in stock prices and so predicts anomalous returns systematically. Their

basic summary measures Profitability Ratio, which is a proxy for firm size and CAPM risk, as
well as the predicted probability of an earnings growth. After adjusting for cross sectional

differences in CAPM beta and firm size, no significant incremental predictive ability is

attributable to profitability ratio. The profitability metric is used as a proxy for projected

return disparities rather than as new evidence of a systematic market reacting to the future

earnings signal in the financial statements. Student (2020), in a study mentioned

“Fundamental Analysis examined the relationship among accounting based fundamental signs

and future earnings of security prices. They applied multiple regression analysis to analyse

the data. The study found that investors are not completely relying on the information given

by the analyst. They also found that the variables such as GDP, Inflation, expected earnings

growth, relation between fundamental signal and future earnings, revisions and forecast errors

are most influencing factors in fundamental analysis”

D. Priya Dharshiny (2021) found that the profitability of ICICI Bank has gone on an upward

direction and as it has invested more in current asset compared to liquid asset, the liquidity

position is fair but not good and found that the bank is in its stable position. One of the

primary concerns of ICIC Bank was unsecured loans and advances, because it severely

declined profitability. They have also suggested few ways to further make an increase in the

profit by decreasing their operational expenses. It has been revealed that higher

management’s approach towards profitability has changed and therefore lower profit margin

has been accepted by the management as new norms of the banking philosophy. For finding

out this, previous year’s financial analysis was conducted through the annual reports by the

researchers.

Gaganjot Singh (2002) in his study “New innovations in banking industry –a study of new

private sector banks” views that the new private sector banks in India are using better

technology and are offering better services to the customers. The new private banks have

emerged as a model to the banking industry in terms of service levels, ambience, technology
etc. As the public sector banks have already established a huge customer base, they become

complacent and are slow to become customer friendly. They are also less innovative in the

use of technology assisted customer service. Because of their huge customer base they feel

that they can withstand competitions from new generation banks.

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comparative-analysis

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