MANAGEMENT INTERNSHIP PROJECT

(MIP)

EQUITY RESEARCH ANALYSIS

Submitted in partial fulfillment for the award of the
degree of Post Graduate Diploma in Management
(PGDM)
(AICTE)

Submitted by
AISHWARYA PUNYARTHI
(Roll no. 65)

Under The Guidance of

Dr. Meena Sharma

2020 – 2022

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 VIVEKANAND EDUCATION
SOCIETY’S BUSINESS SCHOOL
(VBS)

A FINAL REPORT
On

EQUITY RESEARCH ANALYSIS

By
AISHWARYA PUNYARTHI
(Roll no. 65)

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 Certificate

This is to certify that

Mr. /Ms. Aishwarya Shreeniwas Punyarthi
Has completed the project as a part of Management Internship
Project of VBS in as
Mentioned below and has also submitted the report
(I)Project Title EQUITY RESEARCH ANALYSIS ON PRIVATE
SECTOR BANK
In partial fulfillment of the requirements of 2 years PGDM Program
of
Vivekananda Education Society’s Business School, Mumbai

………………………
Faculty Mentor’s Signature
Date --------------------
Place ------------------
(Signature of faculty mentor)

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 ACKNOWLEDGEMENT

I would like to express my gratitude and sincere thanks to my Project

Guide Prof. (Dr.) Meena Sharma. Vivekananda Education Society’s
Business School, for instilling confidence in me to carry out this
study and extending valuable guidance and encouragement from
time to time, without which it would not have been possible to
undertake and complete this project.

I would like to thank my colleagues for their valuable comments and

suggestions for making this cherish able experience for me.

I would also like to thank my parents and my friends, who have stood
by me whenever needed, and without whose support this task would
not have been accomplished.

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 DECLARATION

I hereby declare that this Project submitted by me to the

Is a bonafide work undertaken by me and it is not submitted

to any other University or institution for the award of any
degree diploma certificate or published any time before.

Name: AISHWARYA PUNYARTHI

Roll No.: 65

(Signature of the Student)

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 PROGRAM (MMS/PGDM)
PGDM

Batch Year
2020-2022

ROLL NO: 65

Student Name:
AISHWARYA SHRINIWAS PUNYARTHI

Specialization:
Finance

Faculty Mentor:
Prof. Meena Sharma

STARTS ON: 13TH JAN 2022

Note: Management Internship Project (MIP)
ENDS ON: 16TH APRIL 2022

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 TABLE OF CONTENTS
Sr PARTICULARS PAGE
No. NO.
1 EXECUTIVE SUMMARY 1

2 INDUSTRY ANALYSIS 2
2.1 OBJECTIVES OF THE STUDY 5
2.2 NEED FOR THE STUDY 6
2.3 SCOPE OF THE STUDY 7
3 REVIEW OF LITERATURE 8

4 INTRODUCTION OF EQUITY 9
4.1 EQUITY MARKETS 10
4.2 EQUITY INVESTMENT 11
5 FUNDAMENTAL ANALYSIS 12
5.1 MAJOR PUBLIC SECTOR 13
BANKS IN INDIA
5.2 OVERVIEW OF BANKS 14
5.3 FINDING SECROR P/E 16
5.4 FINDING GROWTH PICK 17
5.5 FINDING VALUE PICK 18
5.6 RATIOS 19
6 TECHNICAL ANALYSIS 25

7 RESULT/ LEARNINGS 31

8 LIMITATION 32

9 RECOMMENTDATION 33

10 CONCLUSION 34

11 REFERENCES 35

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 1. EXECUTIVE SUMMARY
Management studies student is a matter of pride because we are in a field, which helps us to develop
from a normal human being into a disciplined, and dedicated professional. One has to be a good
learner to sharper knowledge in the particular field to achieve and attain the desired goals and
heights. Being a PGDM finance student and the interest area towards the financial Market, I am
taking up a study on the topic of “Fundamental Analysis of a Technology sector.
From this report we actually come to know how fundamental analysis is important before investing
in stock of any company. Study on fundamental analysis of company before investing in stock is
important for each one who he interested in stock market trading. This report will explained various
models used in fundamental analysis. This report will also state the learns and also skills learnt from
this Study.
India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth
of existing financial services firms and new entities entering the market. The sector comprises
commercial banks, insurance companies, non-banking financial companies, co-operatives, pension
funds, mutual funds and other smaller financial entities. The banking regulator has allowed new
entities such as payments banks to be created recently thereby adding to the types of entities
operating in the sector. However, the financial sector in India is predominantly a banking sector
with commercial banks accounting for more than 64 per cent of the total assets held by the financial
system.
The Government of India has introduced several reforms to liberalize, regulate and enhance this
industry. The Government and Reserve Bank of India (RBI) have taken various measures to
facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs). These
measures include launching Credit Guarantee Fund Scheme for Micro and Small Enterprises,
issuing guideline to banks regarding collateral requirements and setting up a Micro Units
Development and Refinance Agency (MUDRA). With a combined push by both government and
private sector, India is undoubtedly one of the world's most vibrant capital markets. In 2017, a new
portal named 'Udyami Mitra' has been launched by the Small Industries Development Bank of India
(SIDBI) with the aim of improving credit availability to Micro, Small and Medium Enterprises'
(MSMEs) in the country. India has scored a perfect 10 in protecting shareholders' rights on the back
of reforms implemented by Securities and Exchange Board of India (SEBI).

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 2. INDUSTRY ANALYSIS.
There are 12 public sector banks (down from 27 banks as of April 1, 2020), 21 private banks, 1,562
urban cooperatives, 94,384 rural cooperative banks, 45 foreign banks, and 56 regional rural banks
in the Indian banking system. Banking is one of India's fastest-growing industries, as it serves as
the engine that drives the country's economic growth. HDFC Bank, Kotak Mahindra Bank, Au
Small Finance Bank, ICICI Bank, Federal Bank, and American Express Bank are some of the key
companies in the banking business.
In India, banks are increasingly focusing on implementing an integrated risk management
strategy.In the fiscal years FY13–18, total banking sector assets grew at a CAGR of 6% to US$ 2.2
trillion, and the banking industry's entire asset value is approximately US$ 270 billion, with total
deposits at nearly US$ 220 billion. With recent additions such as Internet banking and Core banking,
India's banking system has been totally altered, making financial activities more user-friendly and
simple. The Reserve Bank of India regulates the liquidity of Indian banks (RBI). The government
announced the mergers of public sector banks in August 2019, with United Bank of India and
Oriental Bank of Commerce merging with Punjab National Bank and Allahabad Bank merging with
Punjab National Bank.
The Indian government has also taken a number of steps to boost the banking sector, such as the
Pradhan Mantra. Jan dhan yojna, Pradhan mantra jeevan jyoti yojna, and Atal pension yojna have
all contributed to the growth of the Indian banking industry.
Since March, the covid-19 outbreak, which originated in Wuhan, a Chinese province, has had a
negative influence on the global economy and business. I was working on changes in the index
prices of large capital banks, and it had shown some drastic changes after the outbreak of the covid-
19, which was not looking good for the market, and according to a report by rating agency Moody's,
"the pandemic has caused deterioration to the global economy, and the 21-day lockdown for the
safety of people will weigh on the global economy."
With well-established franchises and solid depositor bases, funding and liquidity at large capital
private sector banks will be stable. The agency that assigns ratings. According to the report, the
banking industry's profitability may be harmed by an increase in provisions and a decrease in
revenues. If As in the past, the government increases capital injections into public sector units
(PSUs). It will relieve capital pressure on PSUs in a few years.

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Private sector banks are ones in which the majority of the stock is owned by the bank's shareholders
rather than the government. Private sector banks in India include RBL Bank, HDFC Bank, ICICI
Bank, Yes Bank, and others. Customers can get all banking products and services from them. Fixed
Deposits, Savings Deposits, RDs, Home Loans, Personal Loans, Car Loans, Lockers, Demat
Facilities, Debit/ Credit Cards, ATMs, Foreign Exchange Transactions, Insurance, Wealth
Management, Net Banking, and so on are just some of the products available. Private banks are
noted for being early adopters of information technology in the banking industry.

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 2.1. OBJECTIVES OF THE STUDY:

 To study the fundamental analysis of selected banks.

 To understand the technical analysis of selected banks.
 To understand the participation of the selected banks in the share market.
 To observe and compare the performance of the selected banks in share market.
 To provide an overview of the Banking sector and analyzing the stocks of that sector.
 To study about some of the major players in Banking sector which has good investment prospects.

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 2.2. Need for the Study:

 Most of the investors invest in share market with no idea or clarity on performing the shares and
even they don’t have any knowledge about fundamental and technical analysis.

 The study of my project is fundamental analysis and technical analysis on selected banks and
comparing the performance of the selected banks.

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 2.3. Scope of the study:

Scope of the study is wider covers the banking sectors in India. There is a huge emerging issue of
financial condition of banking sector in India. But, study is only going to cover selected nationalize
three private banks and three public banks in India. Foreign Banks have been excluded from the
study. As the policies and regulations of Foreign Banks are different from other Commercial Banks
they are excluded. The time period is limited from Aril 2017 to march 2021 as it will give exact
impact financial and equity performance of banks. The scope of the project are limited to
understanding the basics of fundamental analysis and technical analysis and apply it to take a
decision of investing in banking sector.

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 3. REVIEW OF LITERATURE
 K.S.Nemavathi & Dr. V.R Nedunchezhian, (2012) in their Study Technical Analysis the researchers
finds that the selected securities had high fluctuations during the period to accomplish the objectives
set out for this research, the effective tools are used.
 Dr. Sreemoyee Guha Roy (2013) in her study Equity Research: Fundamental and Technical
Analysis, examines the economic environment, industry performance and company performance
before making an investment decision. The study arrived at a conclusion about the decision making
behavior of the investors.
 Mrs.J.Nithya & Dr.G.Thamizhchelvan (2014) has found in their study The Effectiveness of
Technical Analysis in Banking Sector of Equity Market, aimed at undertaking technical analysis of
selected companies included in the CNX Nifty. The purpose of the study demonstrates howtechnical
analysis can be of valuable use for the investors in making their investment decisions. Various
analyze tools of technical analysis have been used for forecasting stock prices.
 P. Devika & Dr. S. Poornima (2015) found in their study of Fundamental Analysis as a Method of
Share Valuation in Comparison with Technical Analysis, envisages on different trends of the stock
market and it relates the trends towards the usage of Fundamental and Technical analysis.

• Darshan Shivanand Gadag & Manas Mayur (2016) has founded in their study, Understanding
Technical Analysis: A Conceptual Framework, the stock market indicators would help the investor
to identify major market turning points. The indicators like Moving averages and MACD is a
significant technical analysis tool on any index or stock which helps to understand the price behavior
of the shares.

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 4. INTRODUCTION TO EQUITY
What is Equity?
In accounting and finance, equity is the residual declare or interest of the maximum junior class of
buyers in property, in any case liabilities are paid. If valuations positioned on property do now no
longer exceed liabilities, terrible fairness exists. In an accounting context, Shareholders fairness
(or stockholders fairness, shareholders’ funds, shareholders capital or comparable terms)
constitute the last hobby in property of an organization, unfold amongst man or woman
shareholders of not unusual place or desired inventory. This definition is beneficial to apprehend
the liquidation method in case of bankruptcy. At first, all of the secured lenders are paid in
opposition to proceeds from property. Afterword, a sequence of lenders, ranked in precedence
sequence, have the subsequent declare/proper at the residual proceeds. Ownership fairness is the
closing or residual declare in opposition to property, paid handiest in any case different lenders are
paid. In such instances wherein even lenders couldn't get sufficient cash to pay their bills, not
anything is left over to reimburse owners’ fairness. Thus owner’s fairness is decreased to zero.
Ownership equity is likewise called risk capital, accountable capital and fairness.
• EQUITY SHARES
A fairness proportion, normally known as regular proportion additionally represents the shape of
fractional or component possession wherein a shareholder, as a fractional owner, undertakes the
most entrepreneurial risk related to a commercial enterprise venture. The holders of such stocks
are contributors of the organization and feature balloting rights.
• DERIVATIVES
A spinoff is a monetary device that receives its fee from a few actual appropriate or inventory. It is
the derived fee of an underlying asset. It is, in its maximum primary shape, certainly an agreement
among events to alternate fee primarily based totally at the movement of an actual appropriate or
provider. Typically, the vendor gets cash in exchange for a settlement to buy or promote a few
appropriate or provider at a few special future date. Derivatives provide the a few diploma of
leverage or multiplication as a mortgage. For a small quantity of cash, the investor can manage a
far large fee of organization inventory than could be viable without use of those instruments. This
can paintings each ways, though. If the investor is correct, then extra money may be made than if
the funding have been made at once into the organization itself. The losses are elevated instead,
however, if the investor is wrong. The primary idea of a spinoff agreement stays the equal whether
or not the underlying takes place to be a commodity or a monetary asset. However, there are a few
capabilities that are very abnormal to commodity spinoff markets.

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 4.1 Equity Markets
The stock exchanges are where buyers and sellers of stocks meet. A stock exchange or over-the-
counter market is an equity market where shares are issued and traded. The stock market, often
known as the stock exchange, is one of the most important aspects of a market economy since it
provides enterprises with access to cash and investors with a piece of ownership in a company
with the opportunity to profit from future success. Public stocks, which are those that are listed on
a stock exchange, or privately traded stocks are traded in the equity market. Private equities are
frequently exchanged through dealers, which is what an over-the-counter market is.

Types of Equity Markets

Primary Market:
The primary market is where new equities are first offered for sale. It's also known as the New
Issue Market. In this market, corporations sell securities to investors directly. The price of shares
in the Primary Market is set at par value. Under this market, Issue of new securities takes in form
of either Initial Public Offering (IPO) Or Follow on Public Offer (FPO)

Secondary Market:
A secondary market is a market where equities that have previously been issued are exchanged.
It's also known as the Post-Issue Market. Securities are traded and purchased in this market by
traders and investors. The price of shares changes in the secondary market based on supply and
demand. Bombay Stock Exchange (BSE) & National Stock Exchange (NSE) are two secondary
markets in India.

Intra Day Trading

Intraday trading involves buying and selling of stocks within the same trading day. Here stocks
are purchased, not with an intention to invest, but for the purpose of earning profits by harnessing
the movement of stock indices. Thus, the fluctuations in the prices of the stocks are harnessed to
earn profits from the trading of stocks

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 4.2 EQUITY INVESTMENT

Individuals and businesses buy and hold shares of stock on the stock market in the hopes of receiving
dividends and capital gains when the stock's value improves. It can also refer to the purchase of
equity (ownership) in a private (non-public) corporation or a start-up (a company being created or
newly created). Investing in newborn enterprises is known as venture capital investing, and it is
often thought to be riskier than investing in a publicly traded going-concern position. What is the
best way to invest in equity shares? Investors can purchase equity shares in a corporation on the
security market, either primary or secondary. The main market serves as a marketplace for the
purchase and sale of new securities.
The primary market allows issuers of securities, both government and private companies, to raise
funds to meet their investment needs and/or to meet certain commitments. When a company's shares
are first issued to the public, investors can purchase them through an IPO (Initial Public Offering).
The secondary market is where shares that have been issued to the general public are traded. The
stock exchange only facilitates the trade of equity shares. Anyone interested in purchasing shares of
the corporation can do so from an existing shareholder of company.
Why should one invest in equity in particular?
The value of equities has the potential to rise over time. It also gives your portfolio the boost it needs
to meet your long-term investing objectives. In the long run, research studies have shown that
equities outperform most other types of investments. According to studies, investing in some stocks
for a longer period of time provided considerably better returns than any other type of investment.
This does not, however, imply that all stock investments will provide similar greater returns.
Investment in equities is high. Before making an investment, one should do some research. The goal
of equity research is to examine firms, assess financials, and consider quantitative and qualitative
factors in order to make a judgement on whether or not to invest. To be able to value equity, we
need to first understand how equity is to be analyzed.
Equity Share of any company can be analyzed through:
 Fundamental Analysis
 Technical Analysis

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 5. FUNDAMENTAL ANALYSIS
This is a method I choose because it will allow me to assess securities by attempting to determine
the intrinsic worth of a stock by examining financial statements, health, competitors, and the market.
It also covers the state of the economy as a whole, as well as aspects such as interest rates,
production, GDP, employment, incomes, and manufacturing. It is mostly carried out to determine
the factors that influence an economy's, industries, and company's well-being. The primary purpose
of most analyses is to forecast and observe price profit movement. At the corporate level, it entails
reviewing financial data, management, and business concepts, among other things. We can examine
the demand and supply of products at the industrial level. Fundamental analysis focuses on the
economic, company, and industry analysis to estimate future stock prices. The outcome observed
by performing fundamental analysis is to produce a value that an investor can compare with the
security’s current price, with the aim of figuring out what kind of position to take with that security
(underpriced= buy or keep, overpriced= sell or short sell).

So, basically there are four steps to do fundamental analysis:

 Finding Sector Price-to-earnings ratio (PE)
 Analysis of overvalued and undervalued stock
 Finding growth pick
 Finding value picks

With completion of Fundamental Analysis, 40% of the equity research has been completed, rest of
the research will be based on hedging and technical analysis of the sector and further the company
will be having complete equity research and fundamental and technical analysis of Private banking
sector submitted by me.

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 5.1 Major public sector banks in India
 HDFC Bank
 ICICI Bank
 Kotak Mahindra
 Axis Bank

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 5.2 Overview of Banks
 HDFC Bank

Due to its extensive banking network, the HDFC bank is India's most well-known bank. In terms of
assets, it is without a doubt the largest bank in the country. It has a respectable reach of more than
5500 bank branches around the country, thanks to its impressive market capitalization.

The bank was established in 1994 and is situated in Mumbai, Maharashtra. It is one of India's most
prominent job providers. The bank has gone through several mergers over the years. The Times
Bank was the first to do so in 2000.

In addition, it purchased and took over the Centurion Bank of Punjab in 2008, marking one of the
largest acquisitions in the banking or financial sector. Later in 2021, it also acquired shares in the
TATA Group business entity named ‘FERBINE’. In the same year, it collaborated with Paytm to
offer many credit cards.

 Axis Bank

Axis Bank is an excellent Indian financial services bank that was established on December 3, 1993.
It was formerly known as UTI Bank until changing its name to Axis Bank in 2007. Its headquarters
are in the financial hub of the country (Mumbai).

Axis Bank primarily services retail businesses, SMEs, medium-sized organisations, and large-scale
enterprises. It has a good network of around 4530 branches. Axis Capital Ltd., Axis Finance Ltd.,
Axis Securities Ltd., and others are among its subsidiaries in India and internationally. The bank
bought a digital firm called 'Freecharge' in 2017.

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 ICICI Bank

With over 5270 bank branches and various subsidiaries, ICICI Bank has a large and expanding
banking infrastructure. It was created in January 1955 and is India's second largest bank. It was first
known as the Industrial Credit and Investment Corporation of India Bank, and was then abbreviated
to ICICI Bank.

It is one of the best service providers, including investment banking, life and non-life insurance,
venture capital, and asset management among other services. The company's headquarters are in
Vadodara, Gujarat.

ICICI Bank has been a part in a number of acquisitions. ITC Classic Finance, Bank of Madura,
Bank of Rajasthan, and Sangli Bank, as well as Grindlays Bank offices in Darjeeling and Shimla,
Anagram Finance, Investitsionno-Kreditny Bank, and SCICI, were among the banks it bought.

 Kotak Mahindra Bank

According to current figures, Kotak Mahindra Bank is India's third-largest bank (in terms of assets),
with 1600 branches in over 740 locations. Uday Kotak, a well-known banker, started it in 1985.
Kotak Mahindra Capital, Kotak Mahindra Life Insurance, Kotak Capital Company, and Kotak
Mahindra General Insurance are just a few of its subsidiaries.
It engages in CSR initiatives on a regular basis in addition to offering financial services. The
company's headquarters are in Mumbai. Kotak Mahindra has bought two companies in the last ten
years: ING Vysya Bank in 2015 and Ferbine in 2021.

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 5.3 Finding Sector P/E
I have taken the price to earnings ratio because it will help me tell the amount the investor is willing
to pay for every single rupee of earning that is given by the company. The prices and earning of the
shares have been taken from a trusted webpage. It shows whether a company’s stock price is
overvalued or undervalued.

So, PE can be calculated as= (market price of share/ EPS) and Sector PE will be the average of all
stock’sPE.

Company P/E EPS EPS

name ratio (2021) (2020)

HDFC Bank 20.4 57.88 49.84

ICICI BANK 22.86 27.226 14.81
KOTAK 33.47 50.53 44.73
MAHINDRA
AXIS BANK 17.96 24.19 6.83
Industry P/E 23.6725

If stock PE will be more than sector PE, it will be an overvalue stock and if it will be less than sector
PE, it would be considered as undervalue stock. I have selected 4 companies out of which I have
found out the overvalued and undervalued shares which is given below and all the overvalued shares
are not good performing company or shares and not all undervalued shares are bad performing it
only suggest that shares are more than or less than their P/E ratio.

Company P/E EPS Overvalued /

name ratio EPS (2021) (2020) Undervalued
HDFC Bank 20.4 57.88 49.84 Undervalued
ICICI BANK 22.86 27.226 14.81 Undervalued
KOTAK
MAHINDRA 33.47 50.53 44.73 Overvalued
AXIS BANK 17.96 24.19 6.83 Undervalued
Industry P/E 23.6725

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 5.4 Finding growth picks

We will find Growth pick by PEG Ratio. (Price to earnings growth) I have taken PEG ratio because
I can determine whether the company will be expecting earnings growth while the stock value is
being determined and this would give me more glance at the stocks that have been shortlisted using
P/E ratio.
PEG ratio of 1 gives a perfect correlation between the company's market value and its projected
earnings growth PEG ratios higher than 1.0 are generally considered unfavorable, telling a stock is
overvalued. If it is in between 0-1 the stock is having a scope to perform well.

PEG Ratio= Price to Earnings Ratio/ EPS Growth.

Company name P/E ratio EPS (2021) EPS (2020) EPS Growth Overvalued / PEG Ratio Result
Undervalued

HDFC Bank 20.4 57.88 49.84 16.13162119 Undervalued 1.264597015 Reject

ICICI BANK 22.86 27.226 14.81 83.83524646 Undervalued 0.272677674 Accept Growth Pick

KOTAK MAHINDRA 33.47 50.53 44.73 12.96668902 Overvalued 2.581229483 Reject

AXIS BANK 17.96 24.19 6.83 254.1727672 Undervalued 0.070660599 Accept Growth Pick

EPS Growth will be calculated by taking this year’s EPS and last year’s EPS and then we will
see thegrowth rate.
 PEG ratio = (P/E ratio)/EPS Growth Rate
 EPS Growth rate = {(Current year EPS – Previous year EPS)/Previous year EPS} *100
 If EPS growth rate is negative, then the PEG ratio is N/A

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 5.5 Finding value picks

Why we are doing this analysis:

 Is the company’s revenue growing?

 Is the company making profit?
 Can the company beat its competitors in future?
 And finally, will the company’s stock a good investment?

Company Profit Profit Effect Revenue Revenue(2020) Effect P/E Undervalued/Overvalued

Name (2021) (2020) (2021) ratio
HDFC Bank 31,857 27,296 Increase 31116.53 26257.32 Increase 20.4 Undervalued

ICICI BANK 20,220 11,050 Increase 16192.68 7930.81 Increase 22.86 Undervalued

KOTAK 9,903 8,607 Increase 9876.56 8163.34 Increase 33.47 Overvalued

MAHINDRA
AXIS BANK 7,252 1,879 Increase 23484.83 20161.13 Increase 17.96 Undervalued

So, by the above analysis, we can say that all the stocks revenue and profit is growing or either is
increasing. So, above are 3 value picks we have in our fund. By this, we can interpret that although
the above stocks are undervalued but they can fetch good returns in the future as these are hidden
gem andthis is the time when we should buy it and we can say that these stocks are a good investment
for an investor.

Therefore, we have 3 value picks in our fund. So, by doing fundamental analysis, we saw the stocks
which are good for our fund and by using industry specific ratios, we will do asset allocation i.e. we
will allocate the fund.

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 5.6 Ratio Analysis

All the selected stocks (HDFC, ICICI, KOTAK MAHINDRA, AXIS BANK) are then analyzed
by ratio analysis for deciding the quantum of fundallocation

 For ratio analysis, the stocks are compared on the basis of five ratios which areappropriate to Public
Sector Banks

1. Return on Asset (Higher the better): The return on assets (ROA) shows the percentage of how
profitable a company's assets are in generating revenue. The number will vary widely across
different industries Return on assets gives an indication of the capital intensity of the company,
which will depend on the industry;

ROA = Net Income

Total Assets
*Total Assets=Shareholder Equity + Liabilities

2. Return on Equity (Higher the better): ROE is considered a measure of how effectively
management is using a company’s assets to create profits. Return on equity(ROE) is a measure of
financial performance calculated by dividing net
Income by shareholders' equity.

ROE = Net Income

Shareholder Equity
*Shareholder Equity=Assets−Liabilities

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3. Cost of Deposits (Lower the better): The cost of deposits is a reference to the interest rate
paid by financial institutions for the funds that they use in their business. The cost of funds is one
of the most important input costs for a financialinstitution since a lower cost will end up generating
better returns

Cost of Deposits = (Financial Expenses on Funding Liabilities)

Average (posits + Borrowing)

4. Provision Coverage Ratio (Higher the better): In banking, provisioning means toset aside
or provide some funds to cover up losses if things go wrong and some of their loans turn into bad
assets. Provisioning Coverage Ratio (PCR) refers to the prescribed percentage of funds to be set
aside by the banks for covering the prospective losses due to bad loans. A higher ratio means the
bank can withstand future losses better, includingunexpected losses beyond the loan loss provision.

5. Net NPA Ratio (Lower the better): The net NPA to loans (advances) ratio is used as a
measure of the overall quality of the bank's loan book. An NPA are those assets forwhich interest is
overdue for more than 90 days (or 3 months). Net NPAs are calculatedby reducing cumulative
balance of provisions outstanding at a period end from gross NPAs. Higher ratio reflects rising bad
quality of loans.

Net NPA Ratio = Net NPA

(Gross advances – provisions) X 100

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 Ranking

After calculating all the ratios. Stocks are ranked from 1 to 5 according to thespecification of
the ratio.
For Example: In Return on Asset, Stocks with the highest ROA is ranked 1 and thestock with
the lowest ROA is ranked 4. And vice-versa

Return on Asset (%)

Ratio Rank Company Name Values
1 KOTAK MAHINDRA 2.19
Return on Asset (%) 2 HDFC Bank 1.9
3 ICICI Bank 1.36
4 AXIS BANK 0.74

Return on Equity (%)

Ratio Rank Company Name Values
1 HDFC Bank 15.17
Return on Equity (%) 2 KOTAK MAHINDRA 11.90
3 ICICI Bank 11.21
4 AXIS BANK 6.48

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 The stocks are also compared on Other Parameters which are only specific to thePublic Sector
Banks which include :

1. Net Interest Income (Higher the better): Net interest income (NII) is the differencebetween
revenues generated by interest-bearing assets and the cost of servicing (interest-burdened) liabilities.
For banks, the assets typically include commercial and personal loans, mortgages, construction
loans and investment securities. The liabilities consist primarily of customers' deposits

Net Interest Income= (Interest Earned – Interest Paid)

2. Net Interest Margin (Higher the better): Net Interest Margin is a popular profitability ratio used
by banks which helps them determine the success of firms in investing in comparison to the
expenses on the same investments and is calculated as Investment income minus interest expenses
(this step is referred to as netting) dividedby the average earning assets.

Net Interest Margin = (Interest Earned –Interest Paid)

Average Earning Assets

3. CASA Ratio (Higher the better): CASA ratio stands for current and savings account ratio. CASA
ratio of a bank is the ratio of deposits in current and saving accounts to total deposits. A higher
CASA ratio indicates a lower cost of funds, because banks do not usually give any interests on
current account deposits and theinterest on saving accounts is usually very low

CASA Ratio = CASA Deposit

Total Deposit

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4. Net NPA (Lower the better): Non Performing Asset is the amount outstanding inthe borrower
account, in books of the bank other than the interest which has been recorded and not debited to the
borrower account. Net NPAs is the amount of grossNPAs less (1) interest debited to borrower and
not recovered and not recognized as income and kept in interest suspense (2) amount of provisions
held in respect of NPAs

Net NPA = (Gross NPAs - Provision)

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 Ranking

Rating for all the other parameters will we done in a similar manner to that of ratios For
Example: In Net NPA (%). Stocks with lowest Net NPA will be ranked 1 and thestock with
highest Net NPA will be ranked 4

CASA Ratio (%)

Ratio Rank Company Name Values
1 KOTAK MAHINDRA 60.6
CASA Ratio (%) 2 HDFC Bank 46.11
3 ICICI Bank 46.28
4 AXIS BANK 44.92

NPA Ratio (%)

Ratio Rank Company Name Values
1 KOTAK MAHINDRA 1.2
NPA Ratio (%) 2 HDFC Bank 1.35
3 AXIS BANK 3.17
4 ICICI Bank 4.82

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 6. TECHNICAL ANALYSIS
This is the second technique I've chosen since it will allow me to assess an investment by
attempting to represent price movements in a trend that are influenced by investors' shifting
attitudes toward various economic, monetary, and political influences.
This strategy aids me in detecting a trend reversal at an early stage and following it until the
movement demonstrates or verifies the trend has reversed.
In this strategy, I will evaluate the securities by analysing market activity statistics such as price
and volume in the past. I'll look at the last five years of data for each stock in my asset allocation
table to see if there are any trends that could indicate future activity. This strategy is more focused
toward price movement, which makes it easier for me to read the chart using regular tools.

There few assumptions when we opt this method, which can happen at any time:
 The market discounts everything
 Price moves in trends
 History tends to repeat itself

The outcome observed by performing technical analysis is to produce a call that an investor can
take withthe security’s current trend, with the aim of figuring out whether he/she needs to invest
more into that stock or just hold on the shares that have already been purchased.

Types of trends:
 Up Trends
 Down Trends
 Sideways/Horizontal Trends

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 Types of Patterns:
 Rounding Bottom – Sideways to up
 Cup with handle – sideways to up
 Bump and Run Reversal – Up to down/sideways
 Double Top – Sideways to Down
 Double Bottom- Sideways to Up
 Head & Shoulders – Sideways to up/down
 Triple Top – Sideways to down
 Triple Bottom – Sideways to up

*All these patterns are reversal patterns.

These few basic trends and pattern names which you should know while moving further into the
report tounderstand the analysis given to each stock with completion of Technical Analysis, the
equity research ofthe sector has been completed, further the company will be having complete
equity research on Private Banking sector submitted by me. So now let us see the analysis of each
stock in the report further.

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Kotak Bank

Analysis
The pattern which I identified is DOUBLE TOP which is a reversal pattern where the trend of the
share goes down. We generally have to sell our shares when we see trend like these as there will
be a down trend in future.
So with intersection of trend line (in blue) and double top pattern I have found the sell point where
I needto sell the shares so that I wouldn’t incur any loss. But almost at the end of the trend line
(in blue) the share price starts rising up showing a positive note and this can be identified as a
breakthrough point which can be right time to buy the shares and invest money. In the long term
we can anticipate this shareprice to shoot up. So, call for the Kotak Mahindra Bank stock that as
per the trend, is Investors can BUY it.

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AXIS BANK

Analysis
The pattern which I identified is DOUBLE TOP which is a reversal pattern where the Trend of
the share goes down. Around 2021, I have identified a mix trend of up and down trend and again
at the start of 2022 the same trend has been occurring. We generally have to sell our shares when
we see trend like these as there willbe a down trend in future. So with intersection of trend line (in
blue) and double top pattern I have foundthe sell point where I need to sell the shares if I am
having any so that I wouldn’t incur any loss. But almost at the end of the trend line (in blue) the
share price starts to settle in a specific range which is leading to a sideways trend which can be
right time to hold the shares and not invest money. In the longterm we can anticipate this share
price to shoot up or go down. So, call for the Axis bank as per the trend,is Investor should HOLD
the shares if they have any and shouldn’t buy any extra shares.

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ICICI BANK

Analysis
The pattern which I identified is DOUBLE TOP which is a reversal pattern where the trend of the
share goes down. Around the start of 2018, I have identified a down trend and it goes on till first
quarter of 2019. We generally have to sell our shares when we see trend like these as there will
be a down trend infuture. So with intersection of trend line (in blue) and double top pattern I have
found the sell point whereI need to sell the shares if I am having any so that I wouldn’t incur any
loss. But almost at the end of thetrend line (in blue) the share price starts to settle in a specific
range which is leading to a sideways trendwhich can be right time to hold the shares and not
invest money. In the long term we can anticipate thisshare price to shoot up or go down. So, call
for the ICICI Bank stock as per the trend, Investor should HOLD the shares if they have any and
shouldn’t buy any extra shares.

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HDFC BANK

Analysis
The pattern which I identified is ROUNDING BOTTOM which is a reversal pattern where the
trend of the share goes up. Around mid-2018, I have identified an uptrend and it goes on till last
quarter of 2018. Wegenerally have to buy shares when we see trend like these as there will be an
uptrend in future. So with intersection of trend line (in blue) and rounding bottom pattern I have
found the buy point where I needto buy the shares. But almost at the end of the trend line (in blue)
the share price starts to settle in a specific range which is leading to a sideways trend which can
be right time to hold the shares and not invest money. The company is just two and half years old
so there are high chances of uncertainty. In thelong term we can anticipate this share price to shoot
up or go down. So, call for the HDFC Bank stock asper the trend, is Investor should HOLD the
shares if they have any.

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 7. RESULTS/ LEARNING

 This analysis has taught me more than I could have imagined. Following are the thing that I have
Learned from my Management internship project...
I got to know about the Banking system in India in deep and also about the regulations which are
led down by the Reserve Bank of India for our countries banking system. Banking system is one
of the fastest growing sectors in India. By working on these project I had definitely got a better
understanding of my skill sets.
 Analysis: - Fundamental analysis is essential before investing in stock of any company. As
fundamental analysis gives a clear picture about the company’s position in the market i.e. how
long a company will be in business, its capacity to pay dividends, etc.

 Financial models: - Through this internship I learnt various financial models like dividend model,
valuation model, etc. used in fundamental analysis.

 Technical skills: - Through this project I also learnt the use of various formulas and charts in
advance excel.

 Charts and graphs: - Technical analysis is also important before you invest in stock of any
company. It is more often used while intraday trading as it shows second to second and minute to
minute changes in the stock of the company in graph format.

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 8. LIMITATIONS

 The concept of fundamental and technical analysis is so vast and in detail so that’s why they were
not being able to give me enough time.
 The time period of my MIP program was only 3 months so it was not possible to me to study on
whole analysis part.
 Another big issue was about information because company might not want to disclose all the
confidential information regarding their strategies and plans.
 Technical analysis as a topic is so vast and that includes almost 1000 things which are next to
impossible to learn in 3 months period.
 Lot of charts and patterns are become irrelevant in actual trading scene that needs to get omitted.
 Analysis is only a means not an end. The analysis has been done on the basis of my own
interpretations and up to my best knowledge but every analyst have his or her own interpretations
and suggestions.
 It does not take into consideration the time taken for the completion of the jobs.
 The non-monetary factors are not taken into consideration for the analysis.

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 9. RECOMMENDATION

Considering the outcome of technical analysis and fundamental analysis for the selected stocks in
the fundand following recommendations are made:

HDFC Bank HOLD

ICICI Bank HOLD
AXIS BANK HOLD
KOTAK MAHINDRA HOLD

These recommendations are purely result of the analysis and interpretation of the technical
charts,financial statement and some relevant ratios.
*BUY: buy more shares of that stock.
*HOLD: hold on to the shares that the investor already has.

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 10. CONCLUSION

Financial analysis determines a company’s health and stability, providing an understanding of

how the company conducts its business. But it is important to know that financial statement
analysis has its limitations as well. Different accounting methods adopted by different firms’
changes the visible health and profit levels for either better or worse. Different analysts may get
different results from the same information. Hence, we must conclude that financial statement
analysis is only one of the tools (although a major one) while taking an investment decision.
Stock markets in general are considered volatile and volatility plays a key role in measuring the
risk –return trade-offs. Stock markets are sometimes highly volatile. It depends upon the Investors
how he put the money in different securities to maximize his wealth. An investor should be in a
position to analyses the various investment options available to him and thus minimize the risk
and maximize the returns.

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 11. REFERENCES

https://www.moneycontrol.com/india/stockpricequote/banksprivatesector/kotakmahindrabank/K
MB
https://www.moneycontrol.com/india/stockpricequote/banks-private-sector/icicibank/ICI02
https://www.moneycontrol.com/india/stockpricequote/banks-private-sector/hdfcbank/HDF01
https://www.moneycontrol.com/india/stockpricequote/banks-private-sector/axisbank/AB16
https://www.ibef.org/industry/private-banking.aspx
https://www.hdfclife.com/about-us/hdfc-life-introduction
https://www.myaccountingcourse.com/accounting-dictionary/equity-research
https://www.moneycontrol.com/stocks/marketinfo/marketcap/bse/bank-private.html

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