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It is indeed a moment of great pleasure to express our sense of profound, gratitude & indebtedness to all the people who have been instrumental in making our research a rich experience. First, we would like to thank MMK COLLEGE for having projects as a part of B.B.I. curriculum. This project is a result of efforts of several people, who have affected its shape and content. At the outset, I would like to thank our project guides Mr. Nagrani & Mr Darira. It was our privilege to be trained under them, as we have gained corporation & valuable guidance, throughout the preparation of the project.
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INTRODUCTION (ARTICLE) CORPORATE PROFILE
3 COMPANIES FINANCIALS 7-10 SHARE PRICE 11-13 REASON FOR PRICE FLUCTUATION COMPARISON BETWEEN ITS COMPETITORS CONCLUSION 14-15 16-17
Economic times suggestion Thursday 4th march 2010
ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion (US$ 77 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$ 648.8 million) for the nine months ended December 31, 2009. The Bank has a network of 1,665 branches and about 4,883 ATMs in India and presence in 18 countries. 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 specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
HISTORY OF ICICI
1955: The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses.
1994: ICICI established Banking Corporation as a banking subsidiary. Formerly Industrial Credit and Investment Corporation of India. Later, ICICI Banking Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans etc.
2001: ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s.
2002: The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the group's financing and banking operations, both wholesale and retail, into a single entity. At the same time, ICICI started its international
expansion by opening representative offices in New York and London. In India, ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays Bank.
2003: ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai.
2004: ICICI opened a representative office in Bangladesh to tap the extensive trade between that country, India and South Africa.
2005: ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI established a branch in Dubai International Financial Centre and in Hong Kong.
2006: ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened representative offices in Bangkok, Jakarta, and Kuala Lumpur.
2007: ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in Maharashtra State, and which had
158 branches in Maharashtra and another 31 in Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong in rural areas. With respect to the international sphere, ICICI also received permission from the government of Qatar to open a branch in Doha. Also, ICICI Bank Eurasia opened a second branch, this time in St. Petersburg.
2008: The US Federal Reserve permitted ICICI to convert its representative office in New York into a branch. ICICI also established a branch in Frankfurt.
Year SOURCE OF FUNDS EQUITY CAPITAL PREFRENTIAL CAPITAL RESERVES AND SURPLUS DEPOSITS BORROWINGS MADE BY THE BANK TOTAL APPLICATION OF FUNDS GROSS BLOCK ACCUMULATED DEPRECATION NET BLOCK NETCURRENTASSETS TOTAL 335,554.53 356,899.69 7,443.71 3,642.09 3,801.62 7,036.00 2,927.11 4,108.89 1,113.29 350 48,419.73 218,347.82 67,323.69 335,554.53 1,112.68 350 45,357.53 244,431.05 65,648.43 356,899.69 2009/03 2008/03
Period & months INCOME Operating Income EXPENSES Financial Expenses Personel Expenses Selling Expenses Adminstrative Expenses Capitalised Expenses TOTAL OPER. EXPENSES OPERATING PROFIT Other Recurring Income ADJUSTED PBDIT Provisions Depreciation Other Write offs ADJUSTED PBT Taxes ADJUSTED PAT Non-recurring items Other Non-cash Adjustments REPORTED PAT APPROPRIATIONS Equity Dividned Preference Dividend Retained Earnings 2009/03 38,250.39 2008/03 39,467.92
22,725.93 1,971.70 669.21 7,475.63 0
23,484.24 2,078.90 1,750.60 6,447.32 0
330.64 5,738.55 -511.17 678.6 0 5,571.13 1,830.51 3,740.62 17.51 -0.58 3,758.13 1,224.58 0 4,818.07
65.58 5,772.43 -509.77 578.35 0 5,703.85 1,611.73 4,092.12 65.61 0 4,157.73 1,227.70 0 3,778.63
SHARE PRICE MOVEMENT
Today's High BSE
12/3/2010 11/3/2010 10/3/2010 9/3/2010 8/3/2010 5/3/2010 4/3/2010 3/3/2010
935 915 925 922.1 915 901.05 912 902
941.1 936 929.7 933.8 926.6 908.2 913.95 911.9
932.05 915 908.5 909.2 913 891.65 890 894.55
936.9 931.4 917.8 924.8 922.75 901.8 897.95 908.6
573202 690670 828760 909300 1061125 489301 561954 857441
FIFTY TWO WEEK HIGH LOW
EXCHANGE HIGH (RS.) HIGH DATE LOW (RS.) LOW DATE NAME
BSE 983.70 07/10/2009 267.00 12/03/2009
CURRENT FINANCIAL SNAPSHOT (RS.IN MILLIONS)
Market Capitalization ( Rs cr ) Book Value Debt / Equity P/E Dividend Yield % EPS Return on Net Worth Current Ratio Quick Ratio Interest Cover
104,383.02 444.6 4.42 27.78 1.17 33.73 7.55 0.78 5.94 1.25
REASONS FOR PRICE FLUCTUATION
10th March 2010
In a clear indication that it is seeing robust growth, ICICI Bank has recruited 2,000 new employees in two months, reports CNBCTV18's Latha Venkatesh. It now has a little over 36,000 employees on its rolls and expects to end FY11 with a 10% higher workforce, i.e. 40,500 people. That, incidentally was the highest number of employees it had in its zenith days of March 2008.
• ICICI Bank had trimmed its force to 33,000 in 2009, but is now recruiting for growth and to fill attrition. The main areas where it is recruiting are for getting deposits -- especially savings and current accounts, home loans, and commercial banking.
• India's largest private sector bank has never deserted the campuses. It recruits 120 students from the top 12 B-Schools every year and another 350 students from the second and third tier B-Schools.
9th March 2010
ICICI Bank has touched an intra day high of Rs 924.40 and an intra day low of Rs 915.25. At 10:26 hrs the share was quoting at Rs 916.80, down Rs 5.95, or 0.64%. • The bank sold Prabhadevi property to rationalize costs, reports CNBCTV18. It was trading with volumes of 151,140 shares. • ICICI Bank has allotted 15,860 equity shares of face value of Rs. 10 each on 08 March 2010 under the Employees Stock Option Scheme, 2000.
5th March 2010
Home loan and auto loan rates are set to get expensive for new borrowers, reports CNBC-TV'18s Vidhi Godiawala. ICICI Bank and HDFC have discontinued their special home loan scheme and ICICI Bank and Kotak Mahindra Bank have hiked their auto loan rates by 50 basis points starting tomorrow.
• Banks have not hiked their prime lending rate just yet. The higher rates as of now are for new borrowers.
ICICI Bank has raised auto loan rack rates by 25-50 bps starting tomorrow. The rates hiked depend on the segment and tenor of auto loans. India's largest private sector bank will discontinue its 8.25% home loan scheme from March 1. HDFC too has discontinued its 8.25% home loan offer.
Block Deals are one of the factors in fluctuation in share price of a company, bulk purchases have been made on the date mentioned with respective quantities. Date Exchange Qty Price Value (Cr) Time 12-03-2010 NSE 77306 934.75 7.23 14:33:59 12-03-2010 NSE 56840 935.50 5.32 12:53:50 11-03-2010 NSE 60350 930.50 5.62 13:24:39 11-03-2010 NSE 60555 930.55 5.63 13:24:45 11-03-2010 NSE 58060 930.85 5.4 13:24:36 09-03-2010 NSE 100290 911.00 9.14 11:09:57 09-03-2010 NSE 906326 920.05 83.39 09:00:07 08-03-2010 BSE 133666 920.60 12.31 09:22:40 08-03-2010 NSE 906428 924.40 83.79 15:28:47
The Graph below shows the change in share prices of Bank and its competitors (HDFC BANK, AXIS BANK, KOTAK MAHINDRA BANK) from 1st March 2010 to 11th March 2010.
• Share price of all the banks as you can see above in the graph has increased due to an upward trend in the market. ICICI bank being the highest gainer in increased at the rate of 7% in this week
As you can see above in the graph Axis Bank is the lowest in terms of increase in share price
The 4Cs strategy has played well so far The long articulated 4Cs strategy has started to prove beneficial. The bank has been witnessing surge in low cost deposit franchise on back of rapid branch expansion; its credit quality has improved as the management has adopted a selective lending stance; cost has declined over the past few quarters and the bank has sufficient capital to feed the next phase of credit cycle. Valuations to improve; recommend BUY Based on SOTP valuation we arrive at a fair value of Rs992 for ICICI Bank, implying an upside of 14% from current levels. We value the core banking business at Rs786 using our proprietary Bank 20 valuation model by assigning a FY11 P/BV multiple of 1.7x (a significant discount to peers and the bank’s mean valuation in previous cycle). Other banking and non-banking subsidiaries are also facing improving business environment and we value them at Rs206, 22% of SOTP valuation of the bank.
VALUATION SUMMARY Y/e 31 Mar (Rs m) FY09 FY10E FY11E FY12E Total operating income 159,703 158,122 174,832 201,639 yoy growth (%) (0.9) (1.0) 10.6 15.3 Operating profit (preprovisions) 89,252 87,727 95,315 110,768 Net profit 37,581 36,894 40,786 47,318 yoy growth (%) (9.6) (1.8) 10.6 16.0 EPS (Rs) BVPS (Rs) P/BV (x) ROE (%) ROA (%) CAR (%) 33.8 404 2.2 7.8 1.0 15.5 33.1 438 2.0 7.3 1.0 15.2 36.6 466 1.9 7.7 1.0 15.2 42.5 496 1.8 8.4 1.0 14.2
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