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Fundamental Analysis- HDFC Bank

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This project contains a basic fundamental analysis on HDFC Bank.

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Fundamental Analysis- HDFC Bank

  1. 1. Fundamental Analysis HDFC Bank projected by: Srishti Gupta
  2. 2. Page 1 1 Fundamental Analysis: HDFC Bank A PROJECT ON Fundamental Analysis on HDFC In The Subject Fundamental Analysis Submitted By Srishti Gupta A023 NSE (NCCMP) Under The Guidance Of Prof. Bharat Pithadia To National Stock Exchange In NCCMP Year: 2015-16 SVKM’S NARSEE MONJEE COLLEGE OF COMMERCE &ECONOMICS VILE PARLE (W), MUMBAI – 400056.
  3. 3. Page 2 2 Fundamental Analysis: HDFC Bank EVALUATION CERTIFICATE This is to certify that the undersigned have assessed and evaluated the project on “Fundamental Analysis on HDFC” submitted by Srishti Gupta student of NSE (NCCMP) for the academic year 2015-16. This project is original to the best of our knowledge and has been accepted for Internal Assessment. Name & Signature of Internal Examiner: ______________________________ ______________________________ Amee Vora Principal
  4. 4. Page 3 3 Fundamental Analysis: HDFC Bank DECLARATION BY THE STUDENT I, Srishti Gupta student of NSE (NCCMP), Roll No.: A023, hereby declare that the project titled “Fundamental Analysis on HDFC ” for the subject NCCMP submitted by me for the academic year 2015-16, is based on actual work carried out by me under the guidance and supervision of Prof. Bharat Pithadia. I further state that this work is original and not submitted anywhere else for any examination. Place: Mumbai Date: 14th Jan, 2016 Name & Signature of Student Name: Srishti Gupta Signature: _________________
  5. 5. Page 4 4 Fundamental Analysis: HDFC Bank ACKNOWLEDGEMENT Projects have always been fun Learning experience, but with growing age, at this Professtional Level, it surely demands Corporate and Depth Approach. This project was a great learning experience and I take this opportunity to acknowledge all those who gave me their invaluable guidance and inspiration provided to me during the course of this project by my guide. I would like to thank Mr Bharat Pithadia - Professor of fundamental Analysis. I would also thank the NSE Department of Narsee Monjee College of Commerce & Economics who gave me this opportunity to work on this project which provided me with a lot of insight and knowledge of my current curriculum and industry as well as practical knowledge. Would sincerely thank our coordinator Mr. Harish Sharma for constant guidance over the projects and curriculums. I would also like to thank the library staff of Narsee Monjee College of Commerce & Economics for equipping me with the books, journals and magazines for this project. I would also like to thank my friends and fellow students who helped me in the cause of the project.
  6. 6. Page 5 5 Fundamental Analysis: HDFC Bank SERIAL NUMBER CONTENTS PAGE NUMBER 1 COMPANY FACTS 6-8 2 COMPANY OVERVIEW 9 3 PART1: MACRO ECONOMIC OUTLOOK 10-12 4 PART2: INDUSTRY ANALYSIS 13-16 5 PART3: COMPANY ANALYSIS 17-18 6 FINANCIALS 19 ONWARDS
  7. 7. Page 6 6 Fundamental Analysis: HDFC Bank Company Facts - HDFC Bank Registered Address HDFC Bank House, Senapati Bapat Marg,, Lower Parel Mumbai Maharashtra 400013 Tel: 022-66521000 022-24988484 Fax: 022-24960737 022-24965235 Email: shareholder.grievances@hdfcbank.com Website: http://www.hdfcbank.com Group: HDFC Group Registrars Datamatics Financial Services Ltd. Plot No. B 5, MIDC, Part B Cross Lane Marol, Andheri (E) Mumbai - 400093 Maharashtra Tel: 022-28213383 - 90 Management - HDFC Bank Name Designation Shyamala Gopinath Chairperson Paresh Sukthankar Deputy Managing Director A N Roy Director Keki Mistry Director Renu Karnad Director Name Designation
  8. 8. Page 7 7 Fundamental Analysis: HDFC Bank Aditya Puri Managing Director Kaizad Bharucha Executive Director Bobby Parikh Director Partho Datta Director Malay Patel Additional Director Company Background - HDFC Bank Industry Name Finance - Banks - Private Sector House Name HDFC Group Collaborative Country Name N.A. Joint Sector Name N.A. Year Of Incorporation 1994 Year Of Commercial Production N.A. Regd. Office Address HDFC Bank House,, Senapati Bapat Marg, District Mumbai State Maharashtra Pin Code 400013 Tel. No. 022-66521000,022-24988484 Fax No. 022-24960737,022-24965235 Email : shareholder.grievances@hdfcbank.com Internet : http://www.hdfcbank.com Auditors Deloitte Haskins & Sells Company Status N.A. Registrars Name Datamatics Financial Services Ltd. Address Plot No. B-5, MIDC, Part B Cross Lane, Andheri (E), Mumbai - 400093, Maharashtra
  9. 9. Page 8 8 Fundamental Analysis: HDFC Bank Tel. No. : 022-66712151 - 160 Fax No. : 022-66712230 Email : Investorsqry@dfssl.com Internet : http://www.dfssl.com Listing Details - HDFC Bank Key Dates Year Ending Month Mar AGM Date (Month) Jul Book Closure Date (Month) Jul Listing Information Face Value Of Equity Shares 2 Market Lot Of Equity Shares 1 BSE Code 500180 NSE Code HDFCBANK BSE Group A Whether The Company Forms A Part Of The Following Indices - Sensex Yes Nifty Yes BSE-100 Yes BSE-200 Yes S&P CNX 500 Yes CNX Midcap No CNX FMCG No Listing On Listed On The Stock Exchange, Mumbai, National Stock Exchange of India Ltd., Newyork Stock Exchange
  10. 10. Page 9 9 Fundamental Analysis: HDFC Bank COMPANY OVERVIEW: HDFC Bank Limited is an Indian banking and financial services company headquartered in Mumbai, Maharashtra. Incorporated in 1994, it is the second largest bank in India as measured by assets. It is the largest private sector bank in India by market capitalization as of December 2015, at approximately Rs.2,67,293.02 crores. According to the Brand Trust Report 2015, HDFC was ranked 58th among India's most trusted brands. As of 31 March 2015, the bank had assets of Rs.5,90,503.07. For the fiscal year 2014-15, it reported net profit of Rs.10215.92 crores. HDFC Bank is among the top 50 most valued global bank in terms of market capitalization. It is India’s second-largest private lender in terms of asset size, ranks 45th, with a market capitalisation of $39 billion, Bloomberg data show. Mr. Aditya Puri is the Managing Director of HDFC Bank, and has held this position since 1994. He was recently named in the Barron’s list of Best 30 CEOs and business leader of the year by AIMA. HISTORY In August 1994, ‘HDFC Bank Limited’ was incorporated, with its registered office in Mumbai, India. It commenced operations as a Scheduled Commercial Bank on 5 January 1995 after receiving banking license. The bank also entered into strategic alliance with National Westminster Bank group. The bank was promoted by Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India. HDFC was amongst the first to receive an ‘in principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of RBI’s liberalisation of the Indian Banking Industry in 1994. HDFC Bank’s first corporate office and a full service Branch at Sandoz House, Worli was inaugurated by the then Union Finance Minister, Dr. Manmohan Singh. On March 14, 1995, HDFC Bank went public with the launch of its IPO.
  11. 11. Page 10 10 Fundamental Analysis: HDFC Bank PART 1: MACRO ECONOMIC OUTLOOK Macro-economic Issues Concerning Banking Since mid-July, the RBI has put in place a number of exceptional measures to tighten liquidity with a view to dampening volatility in the foreign exchange market. These measures have raised the effective policy rate for monetary policy operations to 10.25 per cent, aligned to the re-calibrated MSF rate. The intent has been to maintain tight liquidity conditions at the short end of the term structure until the measures designed to alter the path of the CAD and improve prospects for its stable funding take effect. As a number of these measures are now in place and because the external environment has improved, it is now possible for the RBI to contemplate easing these exceptional measures in a calibrated manner. As a first step, therefore, the MSF rate was reduced by 75 basis points. Furthermore, the minimum daily maintenance of the CRR prescribed by the RBI was brought down as mentioned earlier. The timing and direction of further actions on exceptional measures will be contingent upon exchange market stability, and can be two-way. As the measures are unwound, the objective of the RBI would be to normalise the conduct and operations of monetary policy so as to allow the LAF repo rate to resume its role as the operational policy interest rate. However, inflation is high and household financial saving is lower than desirable. As the inflationary consequences of exchange rate depreciation and hitherto suppressed inflation play out, they will offset some of the disinflationary effects of a better harvest and the negative output gap. In the current scenario, banks are constantly pushing the frontiers of risk management. Compulsions arising out of increasing competition, as well as agency problems between management, owners and other stakeholders are inducing banks to look at newer avenues to augment revenues, while trimming costs. Consolidation, competition and risk management are no doubt critical to the future of banking but it is believed that governance and financial inclusion would also emerge as the key issues for a country like India, at this stage of socio- economic development. As a step towards technical environment that affects banking sector in our country, we need to have a look at Porter’s Five Forces Model. The diagrammatic representation of the model is as follows:-
  12. 12. Page 11 11 Fundamental Analysis: HDFC Bank Threat of New Entrants. As part of on-going banking sector reforms, new licenses would be issued to a few new players shortly. And yet the fact remains that anyone and everyone cannot start up a bank. Nevertheless, there are services, such as internet bill payment, on which entrepreneurs can capitalise. Banks are fearful of being squeezed out of the payments business, because it is a good source of feebased revenue. Another drift that poses a threat is companies offering other financial services eg an insurance company offering mortgage and loan services. As far as regional banks are concerned, the possibility of a mega bank entering into the market poses a real threat. Power of Suppliers. The providers of capital might not posture a gigantic hazard, but the threat of suppliers luring away human capital does. Retention of talent becomes difficult in a situation wherein a talented individual working in a smaller regional bank, may be stolen away by bigger banks, investment firms, etc. Power of Buyers. One single retail customer may not really pose much of a threat to the banking industry, but one major factor affecting the power of buyers is relatively high switching costs. If a person has a mortgage, car loan, credit card, checking account and mutual funds with one particular bank, it can be extremely tough for that person to switch to another bank. In an attempt to lure in customers, banks try to lower the price of switching, but
  13. 13. Page 12 12 Fundamental Analysis: HDFC Bank many people would still rather stick with their current bank. On the other hand, large corporate clients have banks running after them, offering innovative plans and schemes. Financial institutions - by offering better exchange rates, more services, and exposure to foreign capital markets - work extremely hard to get high-margin corporate customers. Availability of Substitutes. Our market, as is well known, has a parallel economy based on black money and grey operators. Even if, for a moment, we discard such realities, there would still be plenty of substitutes in the banking industry. Banks offer a suite of services over and above taking deposits and lending money, but whether it is insurance, mutual funds or fixed income securities, chances are there is a non-banking financial services company that can offer similar services. On the lending side of the business, banks are seeing competition rise from unconventional companies that offer preferred financing to customers who buy big items. If a company is offering 0% financing, why would anyone want to get a loan from the bank for the same commodity and pay expensive interest? Competitive Rivalry. The banking sector is highly competitive. The financial services industry has been around for a good amount of time and simply put across, anyone and everyone who needs banking services, already has the access to such services. Banks, therefore, have no choice but to make attempts to lure clients away from their competitors. A bank may do so by offering lower financing, preferred rates and investment services but such an action may cause banks to experience pretty lower profit margins. In such a scenario, concerned bank(s) have an incentive to take on high-risk projects. In the long run, we're likely to see more consolidation in the banking industry. Big fish may, logically, prefer to digest smaller fish rather than spending or cutting on own margins. The Indian banking sector is linked to the world economy but the Indian banking system has had no direct exposure to the sub-prime mortgage assets or to the failed institutions. It has very limited off-balance sheet activities or securitized assets. In fact, our banks continue to remain safe and healthy. The Indian banking sector has been well shielded by the central bank and has managed to sail through most of the crisis with relative ease. It is hoped that the trend would continue for a foreseeable future.
  14. 14. Page 13 13 Fundamental Analysis: HDFC Bank PART 2- INDUSTRY ANALYSIS: BANKING INDUSTRY IN INDIA Introduction Banking in India is the salvation of the nation and its people. Banking has helped in developing the dynamic sectors of the economy and guide in a new dawn of development on the horizon. The sector has transformed the aspirations of millions of people into reality. As on date, Indian banks do assuredly compete with modern banks of the world. The progression in the Indian Banking Industry has been more qualitative than quantitative and it is anticipated to remain the same in the coming years. As per the projections made in the "India Vision 2020" of Planning Commission and the Draft 1 2th Plan, the pace of enlargement in the balance-sheets of banks is likely to decelerate in coming years. The total assets of all scheduled commercial banks by end-March 201 4 is estimated at Rs 50,75,000 crores. Bank assets are expected to grow at an annual composite rate of 13.4 per cent during the 2012-2017 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 recent observations on NPAs have also not been too healthy either. Place Under Sun The Public Sector Banks form the base of the banking sector in the country and account for almost 80 per cent of the total banking industry assets. However, as hinted earlier, most of such banks have huge NPAs, too much or massive manpower and lack of modern technology. On the other hand the Private Sector Banks are making marvellous progress. They are front- runners in Internet banking, mobile banking, phone banking as also ATMs. As far as foreign banks are concerned they are likely to succeed in the Indian Banking Industry. The banking industry is presently in a changeover phase. On the one hand, the PSBs are in the process of detaching their corpulence in terms of unwarranted manpower, excessive NPas and disproportionate governmental equity, while on the other hand the private sector banks are consolidating themselves through M&As. At the same time, the economic and corporate sector slowdown has led to an increasing number of banks fixing on the retail sector. Many of them are also entering the new scenes of insurance. Banks with their impressive reach and a regular interface with the retail investor are the best placed to enter into the insurance sector. Banks have been allowed to provide fee-based insurance services without risk participation, invest in an insurance company for providing infrastructure and services support and set up of
  15. 15. Page 14 14 Fundamental Analysis: HDFC Bank a separate joint venture insurance company with risk participation. The process of granting new licenses is going on as on date and even foreign banks have been given options to participate through Indian entities. The RBI has been affecting bank rate and CRR cuts at regular intervals to improve liquidity and reduce rates. One of the exception was in recent months (mid 2013) when the RBI modified the CRR norms to stem the fall in the Rupee against the Dollar. The recent interest hikes (September 2013) would aid banks that have been facing heat since slide of Rupee began earlier this year. The Road Ahead ‘India Vision 2020’ envisages refining the position of India from the present 11th to 4th among 207 countries given in the World Development Report in terms of the Gross Domestic Product (GDP). It also envisions moving the country from a lowincome nation to an upper middle-income country. To achieve this objective, the India Vision aims to have an annual growth in the GDP of 8.5 per cent to 9 per cent over the next 1 0 years. Economic development of this scale would see quadrupling of real per capita income. When compared with the growth in GDP of less than 6% as of now, this is an ambitious target. This would call for substantial investments in the infrastructure and meeting the funding requirements of a high magnitude would be a challenge to the banking and financial system. The skill of the financial system in its present structure to make available investible capitals to the potential investors in the forms and tones that will be required by them in the coming years, that is, as equity, long term debt and medium and short-term debt would be critical to the achievement of plan objectives. The gap in demand and supply of resources in different segments of the financial markets has to be met and for this, level flow of funds between various types of financial institutions and instruments would need to be enabled. Productivity and Efficiency In the month of August 2013, RBI’s Deputy Governor, during his address in an industry organised event (FIBAC 2013) tried to spell out the productivity and efficiency of banking sector and related challenges. The text ahead is based on the above mentioned address. Investopedia defines productivity as an economic measure of output per unit of input. The concept of productivity is more easily applied to industrial settings while it is more difficult
  16. 16. Page 15 15 Fundamental Analysis: HDFC Bank to define and measure in the context of services sector, including the banking industry. One has to rely upon proxies to gauge productivity of banks and there is no single measure that has been universally accepted as representing banking productivity. It is common to see the terms ‘productivity’ and ‘efficiency’ being used interchangeably in literature. However, productivity is more a measure of performance of labour, which is one of the factors of production. Efficiency, on the other hand, is a much broader term which represents the performance of all factors of production. In case of banks, while productivity measures the performance of their staff, efficiency represents the combined performance of staff, capital and management. However, it needs to be noted that there are strong inter-linkages between the performance of the three factors of production: high productivity of staff will result in efficient utilization of capital, while an efficient management function would result in superior performance by labour and capital. It would, therefore, be safe to conclude that when all the key inputs are optimally deployed, the outcome will be an ‘efficient’ bank. Banks form the core of a nation’s financial system, performing the vital function of financial intermediation through liquidity, maturity and risk transformation. Finance is the lifeline of any commercial activity and banks act as a link between the savers and the borrowers. The productivity and efficiency of banks, thus, critically impacts the productivity and efficiency of all economic activity and is a matter of concern for policy makers and economy watchers. The Indian banking system has seen important productivity improvements over the last two decades with the PSBs, in particular, bridging the gap with new private banks and foreign banks. However, the pace of progress has declined, largely due to lack of desired impetus. India continues to lag behind several other countries on various productivity parameters. Banks’ gains in operational efficiency have, however, come at the cost of their allocational efficiency. The improved operational efficiency has been a result of technological progress and structural changes in balance sheet towards more wholesale business. The operational efficiency gains, though profitable for the banks, have not had the desired beneficial impact on the society as a whole, particularly the rural areas, individuals and small businesses. It is not wrong to say that the vulnerability of the banking system has increased on account of the imbalances arising from growth in operational efficiency without commensurate rise in allocational efficiency. Both Reserve Bank of India and Government of India have initiated several corrective measures to reverse this trend by actively promoting the programme of financial inclusion. Banks have to ensure that they attain greater allocational efficiency by extending access to financial services to the unbanked masses and providing the excluded poor the opportunity to leverage the financial system to improve their economic condition.
  17. 17. Page 16 16 Fundamental Analysis: HDFC Bank True productivity of the banking system can be judged not just by the positive impact on banks’ own financials but by the impact it has on the lives of ordinary citizens. In a Nutshell It is true that banks have been under tremendous pressure, especially during the present fiscal. It is wrong to see such a trend in isolation as a host of factors have been contributing to such a trend. With new RBI Governor at the helm of affairs, banking industry is optimistic even though the pressure would continue for a while. Even though SBI remains the biggest of all, banks like HDFC and AXIS Bank have been successful in leading with their operational efficiencies and resultant productivity. The future that envisages growth of the nation, cannot ignore a parallel growth of banking sector and that being something inevitable, future looks bright for the industry despite present hiccups and glitches.
  18. 18. Page 17 17 Fundamental Analysis: HDFC Bank PART 3: COMPANY ANALYSIS AND FINANCIAL HEALTH PROMOTER HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. Management Business focus HDFC Bank's mission is to be a World Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank’s business philosophy is based on five core values: Operational Excellence, Customer Focus, Product Leadership, People and Sustainability. Capital structure As on 31st March, 2015 the authorized share capital of the Bank is Rs. 550 crore. The paid- up share capital of the Bank as on the said date is Rs 501,29,90,634/- ( 2506495317 ) equity shares of Rs. 2/- each). The HDFC Group holds 21.67 % of the Bank's equity and about 18.87 % of the equity is held by the ADS / GDR Depositories (in respect of the bank's American Depository Shares (ADS) and Global Depository Receipts (GDR) Issues). 32.57 % of the equity is held by Foreign Institutional Investors (FIIs) and the Bank has 4,41,457 shareholders. The shares are listed on the Bombay Stock Exchange Limited and The National Stock
  19. 19. Page 18 18 Fundamental Analysis: HDFC Bank Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No US40415F2002. Distribution network HDFC Bank is headquartered in Mumbai. As of June 30, 2015, the Bank’s distribution network was at 4,101 branches. All branches are linked on an online real-time basis. Customers across India are also serviced through multiple delivery channels such as Phone Banking, Net Banking, Mobile Banking and SMS based banking. The Bank’s expansion plans take into account the need to have a presence in all major industrial and commercial centres, where its corporate customers are located, as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing / settlement bank to various leading stock exchanges, the Bank has branches in centres where the NSE / BSE have a strong and active member base. The Bank also has a network of 11,962 ATMs across India. HDFC Bank’s ATM network can be accessed by all domestic and international Visa / MasterCard, Visa Electron / Maestro, Plus / Cirrus and American Express Credit / Charge cardholders
  20. 20. Page 19 19 Fundamental Analysis: HDFC Bank FINANCIALS Balance sheet (in crores) Mar '15 Mar '14 Mar '13 Mar '12 Mar '11 12 mths 12 mths 12 mths 12 mths 12 mths Capital and Liabilities: Total Share Capital 501.30 479.81 475.88 469.34 465.23 Equity Share Capital 501.30 479.81 475.88 469.34 465.23 Share Application Money 0.00 0.00 0.00 0.30 2.91 Preference Share Capital 0.00 0.00 0.00 0.00 0.00 Reserves 61,508.12 42,998.82 35,738.26 29,455.04 24,911.13 Net Worth 62,009.42 43,478.63 36,214.14 29,924.68 25,379.27 Deposits 450,795.64 367,337.48 296,246.98 246,706.45 208,586.41 Borrowings 45,213.56 39,438.99 33,006.60 23,846.51 14,394.06 Total Debt 496,009.20 406,776.47 329,253.58 270,552.96 222,980.47 Other Liabilities & Provisions 32,484.46 41,344.40 34,864.17 37,431.87 28,992.86 Total Liabilities 590,503.08 491,599.50 400,331.89 337,909.51 277,352.60 Mar '15 Mar '14 Mar '13 Mar '12 Mar '11 12 mths 12 mths 12 mths 12 mths 12 mths Assets Cash & Balances with RBI 27,510.45 25,345.63 14,627.40 14,991.09 25,100.82 Balance with Banks, Money at Call 8,821.00 14,238.01 12,652.77 5,946.63 4,568.02 Advances 365,495.03 303,000.27 239,720.64 195,420.03 159,982.67 Investments 166,459.95 120,951.07 111,613.60 97,482.91 70,929.37 Gross Block 3,121.73 2,939.92 2,703.08 2,347.19 2,170.65 Revaluation Reserves 0.00 0.00 0.00 0.00 0.00 Accumulated Depreciation 0.00 0.00 0.00 0.00 0.00 Net Block 3,121.73 2,939.92 2,703.08 2,347.19 2,170.65 Capital Work In Progress 0.00 0.00 0.00 0.00 0.00 Other Assets 19,094.91 25,124.60 19,014.41 21,721.64 14,601.08 Total Assets 590,503.07 491,599.50 400,331.90 337,909.49 277,352.61 Contingent Liabilities 997,538.88 744,097.98 746,226.39 883,985.32 588,550.98 Bills for collection 0.00 0.00 0.00 0.00 0.00 Book Value (Rs) 247.39 181.23 152.20 127.52 545.46
  21. 21. Page 20 20 Fundamental Analysis: HDFC Bank Profit & Loss account of HDFC Bank ------------------- in Rs. Cr. ------------------- Mar '15 Mar '14 Mar '13 Mar '12 Mar '11 12 mths 12 mths 12 mths 12 mths 12 mths Income Interest Earned 48,469.90 41,135.53 35,064.87 27,286.35 19,928.21 Other Income 8,996.35 7,919.64 6,852.62 5,243.69 4,335.15 Total Income 57,466.25 49,055.17 41,917.49 32,530.04 24,263.36 Expenditure Interest expended 26,074.24 22,652.90 19,253.75 14,989.58 9,385.08 Employee Cost 4,750.96 4,178.98 3,965.38 3,399.91 2,836.04 Selling, Admin & Misc Expenses 15,768.85 13,073.31 11,320.41 8,430.96 7,618.43 Depreciation 656.30 671.61 651.67 542.52 497.41 Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00 Operating Expenses 13,987.55 12,042.20 11,236.12 8,590.07 7,152.91 Provisions & Contingencies 7,188.56 5,881.70 4,701.34 3,783.32 3,798.97 Total Expenses 47,250.35 40,576.80 35,191.21 27,362.97 20,336.96 Mar '15 Mar '14 Mar '13 Mar '12 Mar '11 12 mths 12 mths 12 mths 12 mths 12 mths Net Profit for the Year 10,215.92 8,478.38 6,726.28 5,167.09 3,926.40 Extraordinary Items 0.00 0.00 0.00 0.00 0.00 Profit brought forward 14,654.15 11,132.18 8,399.65 6,174.24 4,532.79 Total 24,870.07 19,610.56 15,125.93 11,341.33 8,459.19 Preference Dividend 0.00 0.00 0.00 0.00 0.00 Equity Dividend 2,005.20 1,643.35 1,309.08 1,009.08 767.62 Corporate Dividend Tax 408.21 279.29 222.48 163.70 124.53 Per share data (annualised) Earning Per Share (Rs) 40.76 35.34 28.27 22.02 84.40 Equity Dividend (%) 400.00 342.50 275.00 215.00 165.00 Book Value (Rs) 247.39 181.23 152.20 127.52 545.46 Appropriations Transfer to Statutory Reserves 2,807.28 2,185.93 1,789.56 1,252.20 1,000.16 Transfer to Other Reserves 1,021.59 847.84 672.63 516.71 392.64 Proposed Dividend/Transfer to Govt 2,413.41 1,922.64 1,531.56 1,172.78 892.15 Balance c/f to Balance Sheet 18,627.79 14,654.15 11,132.18 8,399.65 6,174.24 Total 24,870.07 19,610.56 15,125.93 11,341.34 8,459.19
  22. 22. Page 21 21 Fundamental Analysis: HDFC Bank Cash Flow of HDFC Bank ------------------- in Rs. Cr. ------------------- Mar '15 Mar '14 Mar '13 Mar '12 Mar '11 12 mths 12 mths 12 mths 12 mths 12 mths Net Profit Before Tax 15328.72 12772.05 9750.63 7513.17 5818.66 Net Cash From Operating Activities -15862.27 8363.60 -1868.78 -11355.61 -375.83 Net Cash (used in)/from Investing Activities -1944.27 -1591.26 -858.88 -686.85 -1122.74 Net Cash (used in)/from Financing Activities 14543.44 5562.98 9065.84 3286.19 1227.99 Net (decrease)/increase In Cash and Cash Equivalents -3252.19 12303.47 6342.44 -8731.11 -273.56 Opening Cash & Cash Equivalents 39583.64 27280.17 20937.73 29668.83 29942.40 Closing Cash & Cash Equivalents 36331.45 39583.64 27280.17 20937.73 29668.83
  23. 23. Page 22 22 Fundamental Analysis: HDFC Bank Key Financial Ratios of HDFC Banks Mar '15 Mar '14 Mar '13 Mar '12 Mar '11 Investment Valuation Ratios Face Value 2.00 2.00 2.00 2.00 10.00 Dividend Per Share 8.00 6.85 5.50 4.30 16.50 Operating Profit Per Share (Rs) 36.16 29.65 21.97 18.11 83.56 Net Operating Profit Per Share (Rs) 193.38 171.47 147.37 116.28 428.36 Free Reserves Per Share (Rs) -- -- -- -- -- Bonus in Equity Capital -- -- -- -- -- Profitability Ratios Interest Spread 8.01 8.01 8.78 8.42 8.25 Adjusted Cash Margin(%) 18.91 18.65 17.60 17.55 18.23 Net Profit Margin 21.07 20.61 19.18 18.93 19.70 Return on Long Term Fund(%) 66.77 81.47 80.09 75.20 59.91 Return on Net Worth(%) 16.47 19.50 18.57 17.26 15.47 Adjusted Return on Net Worth(%) 16.47 19.50 18.57 17.26 15.47 Return on Assets Excluding Revaluations 247.39 181.23 152.20 127.52 545.46 Return on Assets Including Revaluations 247.39 181.23 152.20 127.52 545.46 Management Efficiency Ratios Interest Income / Total Funds 8.96 9.22 9.50 8.87 7.97 Net Interest Income / Total Funds 4.14 4.14 4.28 4.00 4.22 Non Interest Income / Total Funds 1.66 1.78 1.86 1.70 1.73 Interest Expended / Total Funds 4.82 5.08 5.22 4.87 3.76 Operating Expense / Total Funds 2.46 2.55 2.87 2.62 2.66 Profit Before Provisions / Total Funds 3.22 3.22 3.10 2.91 3.09 Net Profit / Total Funds 1.89 1.90 1.82 1.68 1.57 Loans Turnover 0.15 0.15 0.16 0.15 0.14 Total Income / Capital Employed(%) 10.62 11.00 11.36 10.57 9.71 Interest Expended / Capital Employed(%) 4.82 5.08 5.22 4.87 3.76 Total Assets Turnover Ratios 0.09 0.09 0.10 0.09 0.08 Asset Turnover Ratio 0.10 0.10 0.11 0.10 0.09 Profit And Loss Account Ratios Interest Expended / Interest Earned 53.79 55.07 54.91 54.93 47.09 Other Income / Total Income 15.66 16.14 16.35 16.12 17.87 Operating Expense / Total Income 23.20 23.18 25.25 24.74 27.43 Selling Distribution Cost Composition -- -- -- -- -- Balance Sheet Ratios Capital Adequacy Ratio 16.79 16.07 16.80 16.52 16.22 Advances / Loans Funds(%) 80.97 82.33 79.93 79.19 79.34 Debt Coverage Ratios Credit Deposit Ratio 81.71 81.79 80.14 78.06 76.02
  24. 24. Page 23 23 Fundamental Analysis: HDFC Bank Investment Deposit Ratio 35.13 35.05 38.51 36.99 34.45 Cash Deposit Ratio 6.46 6.02 5.46 8.81 10.79 Total Debt to Owners Fund 7.27 8.45 8.18 8.24 8.22 Financial Charges Coverage Ratio 0.69 0.66 0.63 0.63 0.88 Financial Charges Coverage Ratio Post Tax 1.42 1.40 1.38 1.38 1.47 Leverage Ratios Current Ratio 0.04 0.06 0.06 0.08 0.06 Quick Ratio 12.69 8.55 7.84 6.20 6.89 Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit 19.62 19.38 19.46 19.52 19.55 Dividend Payout Ratio Cash Profit 18.44 17.96 17.74 17.67 17.35 Earning Retention Ratio 80.38 80.62 80.54 80.48 80.45 Cash Earning Retention Ratio 81.56 82.04 82.26 82.33 82.65 AdjustedCash Flow Times 41.46 40.15 40.15 43.21 47.15 Mar '15 Mar '14 Mar '13 Mar '12 Mar '11 Earnings Per Share 40.76 35.34 28.27 22.02 84.40 Book Value 247.39 181.23 152.20 127.52 545.46 Peer Competition Name Last Price Market Cap. (Rs. cr.) Net Interest Income Net Profit Total Assets HDFC Bank 1,073.00 270,717.17 48,469.91 10,215.92 590,503.07 ICICI Bank 250.10 145,352.67 49,091.14 11,175.35 646,129.29 Kotak Mahindra 702.45 128,708.36 9,719.87 1,865.98 106,012.08 Axis Bank 432.55 102,893.84 35,478.60 7,357.82 461,932.39 IndusInd Bank 935.05 55,507.31 9,691.97 1,793.72 109,115.92 Yes Bank 718.70 30,136.63 11,572.00 2,005.36 136,170.42 IDFC Bank 58.40 19,812.92 - - 0.05 ING Vysya Bank 1,027.00 19,719.13 5,205.22 657.85 60,413.23 Federal Bank 55.10 9,468.11 7,419.46 1,005.75 82,850.47
  25. 25. Page 24 24 Fundamental Analysis: HDFC Bank Karur Vysya 455.05 5,545.44 5,395.87 464.28 53,152.49 City Union Bank 91.05 5,456.16 2,698.86 395.02 27,871.13 JK Bank 75.70 3,669.77 7,061.13 508.60 76,085.46 South Ind Bk 19.25 2,599.09 5,286.22 307.20 59,116.32 Karnataka Bank 122.00 2,299.37 4,698.42 451.45 51,836.60 DCB Bank 77.15 2,188.30 1,422.42 191.18 16,132.30 Lakshmi Vilas 91.00 1,633.10 2,214.53 132.29 24,705.43 StanChart IDR 54.40 652.80 - - 131,000.95 Dhanlaxmi Bank 22.90 406.34 1,283.59 -241.47 14,351.90 Goldman BEES 2,274.25 233.34 -- -- -
  26. 26. Page 25 25 Fundamental Analysis: HDFC Bank Balance Sheet ------------------- in Rs. Cr. ------------------- HDFC Bank ICICI Bank Kotak Mahindra Axis Bank IndusInd Bank Mar '15 Mar '15 Mar '15 Mar '15 Mar '15 Capital and Liabilities: Total Share Capital 501.30 1,159.66 386.18 474.10 529.45 Equity Share Capital 501.30 1,159.66 386.18 474.10 529.45 Share Application Money 0.00 7.44 3.00 0.00 14.05 Preference Share Capital 0.00 0.00 0.00 0.00 0.00 Reserves 61,508.12 79,262.26 13,754.91 44,202.41 9,710.02 Revaluation Reserves 0.00 0.00 0.00 0.00 391.01 Net Worth 62,009.42 80,429.36 14,144.09 44,676.51 10,644.53 Deposits 450,795.64 361,562.73 74,860.31 322,441.94 74,134.36 Borrowings 45,213.56 172,417.35 12,149.71 79,758.27 20,618.06 Total Debt 496,009.20 533,980.08 87,010.02 402,200.21 94,752.42 Other Liabilities & Provisions 32,484.46 31,719.86 4,857.97 15,055.67 3,718.96 Total Liabilities 590,503.08 646,129.30 106,012.08 461,932.39 109,115.91 HDFC Bank ICICI Bank Kotak Mahindra Axis Bank IndusInd Bank Mar '15 Mar '15 Mar '15 Mar '15 Mar '15 Assets Cash & Balances with RBI 27,510.45 25,652.91 3,928.30 19,818.84 4,035.14 Balance with Banks, Money at Call 8,821.00 16,651.71 2,334.06 16,280.19 6,744.00 Advances 365,495.03 387,522.07 66,160.71 281,083.03 68,788.20 Investments 166,459.95 186,580.03 30,421.09 132,342.83 24,859.37 Gross Block 3,121.73 4,725.52 1,206.71 2,413.05 1,119.56 Accumulated Depreciation 0.00 0.00 0.00 0.00 0.00 Net Block 3,121.73 4,725.52 1,206.71 2,413.05 1,119.56 Capital Work In Progress 0.00 0.00 0.00 101.26 38.02 Other Assets 19,094.91 24,997.05 1,961.21 9,893.19 3,531.63 Total Assets 590,503.07 646,129.29 106,012.08 461,932.39 109,115.92 Contingent Liabilities 997,538.88 868,190.58 68,092.15 640,183.59 215,702.02 Bills for collection 0.00 0.00 0.00 0.00 0.00 Book Value (Rs) 247.39 138.72 183.09 188.47 193.40
  27. 27. Page 26 26 Fundamental Analysis: HDFC Bank Profit & Loss account ------------------- in Rs. Cr. ------------------- HDFC Bank ICICI Bank Kotak Mahindra Axis Bank IndusInd Bank Mar '15 Mar '15 Mar '15 Mar '15 Mar '15 Income Interest Earned 48,469.90 49,091.14 9,719.87 35,478.60 9,691.96 Other Income 8,996.35 12,176.13 2,028.45 8,365.05 2,403.87 Total Income 57,466.25 61,267.27 11,748.32 43,843.65 12,095.83 Expenditure Interest expended 26,074.24 30,051.53 5,496.13 21,254.46 6,271.69 Employee Cost 4,750.96 4,749.88 1,466.68 3,114.97 980.48 Selling and Admin Expenses 0.00 0.00 0.00 0.00 0.00 Depreciation 656.30 658.95 193.00 405.67 126.85 Miscellaneous Expenses 15,768.85 14,631.56 2,726.52 11,710.72 2,923.11 Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00 Operating Expenses 13,987.55 11,495.83 3,254.72 9,203.74 2,725.94 Provisions & Contingencies 7,188.56 8,544.56 1,131.48 6,027.62 1,304.50 Total Expenses 47,250.35 50,091.92 9,882.33 36,485.82 10,302.13 HDFC Bank ICICI Bank Kotak Mahindra Axis Bank IndusInd Bank Mar '15 Mar '15 Mar '15 Mar '15 Mar '15 Net Profit for the Year 10,215.92 11,175.35 1,865.98 7,357.82 1,793.72 Extraordionary Items 0.00 0.00 0.00 0.00 0.00 Profit brought forward 14,654.15 13,318.59 4,005.29 13,501.45 2,623.33 Total 24,870.07 24,493.94 5,871.27 20,859.27 4,417.05 Preference Dividend 0.00 0.00 0.00 0.00 0.00 Equity Dividend 2,005.20 2,898.81 82.07 1,087.54 212.01 Corporate Dividend Tax 408.21 271.15 13.58 221.42 43.15 Per share data (annualised) Earning Per Share (Rs) 40.76 19.28 24.16 31.04 33.88 Equity Dividend (%) 400.00 250.00 18.00 230.00 40.00 Book Value (Rs) 247.39 138.72 183.09 188.47 193.40 Appropriations Transfer to Statutory Reserves 2,807.28 4,062.57 587.06 1,926.82 497.87 Transfer to Other Reserves 1,021.59 0.00 93.30 0.00 0.00 Proposed Dividend/Transfer to Govt 2,413.41 3,169.96 95.65 1,308.96 255.16
  28. 28. Page 27 27 Fundamental Analysis: HDFC Bank Balance c/f to Balance Sheet 18,627.79 17,261.42 5,095.26 17,623.49 3,664.02 Total 24,870.07 24,493.95 5,871.27 20,859.27 4,417.05 Cash flows ------------------- in Rs. Cr. ------------------- ICICI Bank Axis Bank IndusInd Bank Kotak Mahindra HDFC Bank Mar '15 Mar '15 Mar '15 Mar '15 Mar '15 12 mths 12 mths 12 mths 12 mths 12 mths Net Profit Before Tax 15819.92 11056.83 2709.17 1865.98 15328.72 Net Cash From Operating Activities -4824.49 -12922.02 -321.43 5121.93 -15862.27 Net Cash (used in)/from Investing Activities -9199.56 -7989.65 -276.16 -4112.53 -1944.27 Net Cash (used in)/from Financing Activities 15005.67 28846.00 4607.29 -726.93 14543.44 Net (decrease)/increase In Cash and Cash Equivalents 775.02 7860.34 4009.70 282.47 -3252.19 Opening Cash & Cash Equivalents 41529.60 28238.69 6769.44 5979.89 39583.64 Closing Cash & Cash Equivalents 42304.62 36099.03 10779.14 6262.36 36331.45

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