Equity analysis

ICICI- Equity Analysis

Dark HorsesSymbiosis Institute of Business

Management, Bangalore

Fundamental Analysis

Analysis of Indian Economy

• One of the most attractive destinations of investment due to recent government policies and reforms

• GDP is 5.6 % and is expected to grow to 6.4%• IIP growth rate 2.5 %• Inflation is 4.38 @ 13th dec 2014

Banking Industry AnalysisPorter Five forces model

Bargaining Power Of Suppliers

• Suppliers do have an impact on Banks when comes to bargaining aspect

• Especially banks are the one who strive for high security , this makes them more adaptable to the changing times, which in turn makes dependant on suppliers who provide them with– Software– Staffing– Consulting– Legal issues etc

Bargaining Power of Buyers

• Larger the customer base, lesser the impact will be there on bargaining

• As the Industry is large and it serves for the main purpose of security and Liquidity purposes, the main say will be with Banks

• Customers cannot demand much as the Banks are already under the regulations of RBI and cannot cut down under.

Threats to Substitutes

• There are many new entrants, who provide with similar banking services

• They do have a lot of impact and play a role in profit variations

Barriers to Entry

• As this industry’s main purpose is to provide banking services with utmost secure and seamless operations, the new entrants face a threat when establishing themselves in the industry

• The learning curve is very high, which means the new entrants need to spend some time and then start their operations.

Intense Rivalry among existing Players

• Major concern for this industry is they have to comply to regulations set by regulatory bodies here it is RBI

• Which means, there will be a clear supervision over the operations and the competitions posed by each of them. If RBI feels it as violation, it will punish severely

• So the Rivalry is less compared to any other industry• As the Industry is also large, there is no chance to steal the

market share

Company Analysis

ICICI Bank history

• 1994 – ICICI Bank was established• 1998 - ICICI Bank started its internet banking services• 1998 – ICICI Bank went to IPO• 2000 – Went to issue equity in the form of ADR’s on the

NYSE• 2001- ICICI Bank acquired Bank of Madura ltd in all stock

amalgamation• 2002- ICICI Personal Finance Services limited and ICICI

Capital Services limited merged with ICICI Bank

ICICI Facts

• India’s Second Largest bank in terms of total assets• It is one of the major sources of foreign currency loans in

Indian Industry• This bank is India’s largest credit card issuer• ICICI Bank also has the largest international balance sheet

among all the banks in India. • CASA ratio is around 42.90%• NPA’s are around 0.82% which is a concern

ICICI Bank profile

• Type : Public company• Industry: Banking, Financial Services• Head quarters: Mumbai• Revenue: US $ 8.25 bn• Operating Income: US $ 1.93 bn• Profit : US $ 1.83 bn• Total assets : US $ 99 bn• Total equity : US $ 12.73 bn

Board of Directors

• Independent DirectorsMr. K. V. Kamath, ChairmanMr. Dileep ChoksiMr. Homi R. KhusrkhanMr. M.S. RamachandranDr. Tushaar ShahMr. V. K. SharmaMr. V. SridarMr. Alok Tandon

•Wholetime DirectorsMs. Chanda Kochhar,(MD& CEO)Mr. N. S. Kannan,(Executive Director)Mr. K. Ramkumar,(Executive Director)Mr. Rajiv Sabharwal,(Executive Director)

Value chain for ICICI Bank

Service and products offered

• Funds & Investments• Insurance & Risk protection• Investment Advice• Credit Cards• Managing Investment• Banking Products• Banking Services• Business Banking

• Interest Spread

Year Interest Spread

2010 2.1

2011 2.25

2012 2.2

2013 2.54

2014 2.71

Value of stock at NSE,BSEAnd further details

Share Holding pattern

mutual fund and UTI8%

Deutsche Bank trust CO.29%

FII,NRI,Foreign41%

Banks and FI's0.03%

Bodies Corporate2%

Individuals5%

Insurance companies

14%

share holding

ESOPS

Ownership pattern

• ICICI is one of the largest companies with no clear promoter group

• Many financial institutions hold varying amount of stakes in ICICI

• No one exercises the influence on decision making• This gives management the enormous freedom and

autonomy in diversification• Major stakeholders are institutions @63.07 % • Which leads to high volatility in stock prices

Important Ratios

Vertical analysisICICI Bank HDFC Bank Axis Bank Yes Bank

Earning per share

18.21 38.33 28.45 42.37

P/E Ratio 18.60 24.66 17.54 17.88

Price to Book value ratio

2.68 5.26 0.61 3.84

Dividend yield 1.34 0.62 2.00 0.80

As of jan 7th 2015

Dividend payout

Technical Analysis

Share Price-Volume

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Trend in Share Price

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Cup- Handle pattern

Resistance- Support

Breakout pattern