COMPANY PROFILE

ICICI BANK PROFILE

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended March 31, 2010. The Bank has a network of 2,014 branches and about 5,219 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 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). ICICI Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and representative offices in the United States, United Arab Emirates, China, South Africa and Bangladesh. Our UK Subsidiary has established a branch in Belgium. ICICI Bank is the most valuable bank in India in terms of market capitalization. ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees. At June 5, ICICI Bank, with free float market capitalization of about Rs. 480.00 billion ranked third amongst all the companies listed on the Indian Stock Exchanges. ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICIs shareholding in ICICI Bank was reduced to 46% through a public offering of shares in Indian fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Banks acquisition of Bank of Madura Limited in all-stock, amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, ICICI was setup as wholly private sector limited company under the company act in 5 January, 1985 with Government support and under the sponsorship of

World Band and representative of Indian Industry. The Principal Objective* was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries an affiliate like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution, from non-Japan Asia to be listed on the NYSE. * Principal Objective : To assist promotion development and modernization of the industrial enterprises in the private sector. To increase the investment of private capital from Indian foreign sources. To provide medium term and long term project financing, leasing and other financial services. The resources of ICICI are to firm of first share capital, interest free loan by the Government of India. ORGANIZATION OF ICICI At the apex of an organization is the board of director, in which the chairman who is also the managing director of corporation the members of director is 15. Its efforts to promote new investment opportunity in backward area in 1998. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICII and
9

ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI groups universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entitys access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICIs strong corporate relationships built up over five decades, entry into new business segments, hither market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI hand its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI groups financing and banking operations, both wholesale and retail, have been integrated in a single entity. Free float holding excludes all promoter holdings, strategic investments and cross holdings among public sector entities. ICICI Bank disseminates information on its operation and initiatives on a regular basis. The ICICI Bank website serves as a key investor awareness facility, a lowing stake holders to access information on ICICI Bank at their convenience. ICICI Banks dedicated investor relations personal play a
10

proactive role in disseminating information to both analysts and investors and respond to specific queries.

SECURITY ANALYSIS

Fundamental Analysis

Technical Analysis

Efficient Market Hypothesis

The Economic Analysis

The Industry Analysis

The Company Analysis

Technical Tool

Weak-form Efficiency

Semi-strong form efficiency

Strong form Efficiency

Dow Theory

Bars and Line charts

Moving Average

Oscillators

Short Selling

SECURITY ANALYSIS : Security analysis refers to the analysis of trading securities. It analyses the share prices, return and the risk involved in a security. Every investment is risky and the expected return is related to the risk. The basic purpose of the

11

securities analysis is to find our the intrinsic value of a security for decision making. Generally the investors have many motives for investing. The investors interest is to earn a better return on their investment by maximizing the risk. FUNDAMENTAL ANALYSIS Fundamental analysis is the study of economic factor industrial environment and the factor related to the company. A Fundamental analysis is a time honoured value based approach depending upon a careful assessment of the fundamental analysis consists of Economic analysis Banking industry analysis Company analysis Profile of SBI Profile of ICICI Ratio analysis of SBI Ratio analysis of ICICI The Fundamental analysis is aimed at analyzing the various fundamental or basic factor that affect the risk return of securities. Sl. No. Intrinsic Value i. If intrinsic value is greater than market ii iii price undervalued security If the intrinsic value is lower than the market price over valued security If the intrinsic value is equal to the market price ECONOMIC ANALYSIS : Decision Buy the security Sell the security No action

12

Economic analysis with favorable GDP with savings, investment, stable prices, balance of payment, and infrastructure facilities which provides a best environment for common stock investment. The Economic analysis provide the investor to develop a sound economic understanding and be able to interpret the impact of important economic indicator in stock market. The level of economy has an impact on investment in many ways. If the economic growth rapidly, the industry can also be expected to show rapid growth and vice versa. When the level of economic activity is low, stock price are low, and when the level of economic activity is high, the stock price are high reflecting the prosperous outlook for sales and profit of the firms. Vigorous growth with strong macroeconomic fundamentals has characterized developments in the Indian economy in 2008-2009 so far. However, there are some genuine concerns on the inflation front. Growth of 9.0% and 9.2% in2007-2009 and 2009-2010 shows a positive sign, the surging pattern in agriculture continued with growth estimated at 6.0% and 2.7% in the two resent year, and services maintained on the industrial segment. The higher growth trends, particularly in manufacturing boosted sentiments with in the country and abroad. The overall macro economic fundamentals are robust, particularly with tangible progress towards fiscal consolidation and a strong balance of payment position. With an up surge in investment, the outlook is distinctly up beat. The ratcheting up of growth observed in recent years in reflected in the eleventh five year target of an average annual growth of 9.0% relative to 8.0% targeted by the tenth plan (2003-2006 to 2008-2009). Services contributed as much as 78.6% of the overall average growth in GDP in the last five years. The entire residual contribution came from industry. As a
13

result, in 2008-2009, while the share of agriculture in GDP decline to 18.5%, the share of industry and service improved to 30.4% and 59.1%, respectively. SAVINGS AND INVESTMENT The gross domestic savings as a proportion of GDP shows an increasing trend with the saving ration rising from 30.4 per cent in 2008-07 to 39.7 per cent in 2007-08, 31.1 per cent in 2008-07 and 32.4 percent in 2008 09. The rise in the savings rate in 2007-08 was due to private corporate and the household sector, which as proportion of GDP, increased by 1.0 percentage point and 0.7 percentage points, and made a negative contribution to the overall saving rate. However, a redeeming feature of recent years is that the savings of the public sector, which had been negative until 2008-09, was positive for the third successive year in 2007-08. The positive saving of Rs. 81,262 crore in 2007-08 (QE) is largely attributable to the higher savings of non-departmental as well as departmental enterprises. The Indian economy has shown a sharp rise in the savings rate of the private corporate sector for tour years. The savings rate for 2007-08, as per the quick estimates, has been placed at 8.1 per cent. The private corporate sector has financed a large part of its investment in the on-going long apex cycle from such retained earnings or savings. As much as 0.7 percentage point of the 1.5 percentage points increase in gross domestic savings rate between 2008-09 and 2009 10 has come from the household sector. a construction boom with residential buildings financed from housing loans form banks and the progressive maturing of the domestic financial markets. While Housing loans from banks has tended to increase household savings in physical form and depress financial savings,
14

Progressive maturing of the domestic financial markets has provided shift in the household portfolio in the three years ending in 2009-10. Physical savings as a proportion GDP has declined steadily from a high of 14.8 percent in 2009-10 to 11.7 per cent in 2009-10. Financial savings, on the other hand, after declining from 12.3 per cent to 11.7 per cent between 200910 and 2008-09, more than recovered to 11.7 per cent in 2009-10. The increase in savings rate is what is to be expected with higher growth rate of the economy and a declining dependency ratio. With the proportion of population in the working age group of 15-64 years increasing steadily from 62.9 per cent in 2010 to 68.4 per cent in 2026, the demographic dividend in the form of high savings rate is likely to continue. As the savings rate has gone up, private final consumption expenditure (PFCE) at current prices as a proportion of GDP, has shown a declining trend particularly from 2005-07. PFCE as a proportion of GDP declined from 63.1 per cent in 2008-07 to 62.1 per cent in 2007-08, 60.0 per cent in 2008-09, and further to 58.7 per cent in 2009-10. This decline has also been accompanied by substantial changes in terms of the shares of different commodity groups. In PFCE, the share of food, beverages and tobacco came down from 43.3 per cent in 2008-09 to 39.4 per cent in 2009-10. The other major items of importance, namely, transport and communication, as a proportion of PFCE, rose from 15.8 per cent in 2008-07 to 19.1 per cent in 2008-07. Government final consumption expenditure GFCE), after declining from 11.9 per cent in 2008-07 to 11.0 per cent in 2008-10, increased to 11.5 per cent of GDP in 2009-2010. with the rise in the rate of gross domestic savings between 2007- 08 and 2008-09, there was a step up in the rate of gross domestic capital

15

formation (GDCF) or investment from 28 per cent of GDP to 31.5 per cent of GDP leading to a savings investment gap or a current account deficit of 0.4 percent of GDP in 200809. GDCF at constant prices base: 2001-2002) as a proportion of GDP is consistently lower than the corresponding proportion at current prices. This differential may reflect the greater increase in the prices of capital goods relative to the general price level, with growing technological sophistication of the production processes in the economy in general and manufacturing in particular. But, irrespective of the choice of constant or current prices as the weights, the direction of change from year to year remains unaltered. This may indicate a recent pick up in fresh investment for creating additional capacity through fixed capital formation, particularly in the private sector. GDP growth in India in the post-reform period was driven mostly by Private final consumption expenditure or PFCE growth. PFCE Contributed more than one half of the growth every year until 2007-09. After falling below one half in 2008-09, it had again dominated GDP Growth in 2009-10. But this appears to have undergone a virtuous Transformation with investment rather than private consumption being he Main source of GDP growth in the latest two years of 2008-09 and 2009- 10. Data on consumption and investment in the national accounts available until 2007-08 show that the 7.25 percentage point contribution of investment to 13.1 per cent growth in GDP at current market prices in 2008-09 exceeded the corresponding contribution of private final consumption expenditure at 7.25 percentage point for the first time in recent years. In terms of contribution to growth of GDP at current market prices, from the demand side, investment continued to provided the lead during 2008-07 and 2007-08. The percentage

16

point contribution of investment in the growth of GDP at current market prices of 13.1 per cent and 14.1 per cent in 2008-09 and 2009-10, respectively, were 7.6 per cent and 7.0 per cent, respectively. With imports growing faster than exports, the external balance continued to have a negative contribution to GDP growth in recent years. AGRICULTURE After an annual average of 3.0 per cent in the first five years of the New millennium starting 2005-07, growth of agriculture at only 2.7 per Cent in 2008-09, on a base of 6.0 per cent growth in the previous year, is a Cause of concern. Low investment, imbalance in fertilizer use, low seeds Replacement rate, a distorted incentive system and low post-harvest value Addition continued to be a drag on the sectors performance. With more than half the population directly depending on this sector, low Agricultural growth has serious implications for the inclusiveness of Growth. Furthermore, poor agricultural performance, as the current year has demonstrated, can complicate maintenance of price stability with Supplyside problems in essential commodities of day-to-day Consumption. The recent spurt of activity in food processing and Integration of the supply chain from the farm gate to the consumers plate Has the potential of redressing some of the root causes such as low Investment, poor quality seeds, and little post-harvest processing. Prices of primary commodities, mainly food, have been on the rise in 2008-09 so far. Wheat, pulses, edible oils, fruits and vegetables, and Condiments and spices have been the major contributors to the higher Inflation rate of primary articles. Within the primary group, the mineral Subgroup recorded the highest year-on-year inflation at 18.2 per cent,
17

Followed by food articles at 12.2 per cent and non-food articles at 12.0Per cent. Food articles have a high weight of 15.4 per cent in the WPI Basket. Including manufactured products such as sugar and edibleoils, Food articles contributed as much as 27.2 per cent to overall inflation of 6.7 per cent on February 3, 2009. Starting with a rate of 3.98 per cent, the in flation rate in 2008-09has been on a general upward trend with intermittent decreases. However, average inflation in the 2 weeks ending on February 3, 2009 remained at 5 per cent. Government closely monitored prices every week and initiated Measures to enhance domestic availability of wheat, pulses, sugar and Edible oils by a combination of enhanced imports, export restrictions and Fiscal concessions. In wheat, State Trading Corporation, the parastatal, tendered overseas for 55 lakh tonnes of wheat; private trade as permitted to import wheat at zero duty from September 9; and exports were banned from February 9, 2009. The minimum support price (MSP) of wheat raised by Rs.50 Per quintal and announced well in advance of the sowing season to bring additional acreage under wheat. In pulses, imports were allowed at zero duty from June 8, 2008; export was banned from June 22, 2008; and National Agricultural Cooperative Marketing Federation (NAFED) purchased and among overseas. Regulation of commodity futures markets was strengthened for wheat, sugar and pulses; and as a matter of abundant precaution, futures trading was banned in urad and tur from January 24, 2009. Duty on palm group of oils, which meets more than a half of the domestic demand supply shortfall in edible oils, was reduced by 20-22.5 percentage points in a phased sequence, first in August 2008 and later in January 2009. Further, tariff values of these oils for import duty assessment

18

were frozen. On January 22, 2009, further duty cuts were announced for Portland cement, various metals and machinery items. With a firming up of international prices, the impact of duty-free import of wheat and pulses in rolling the domestic prices back was limited. But such imports unproved domestic market discipline. INFLATION With a shortfall in domestic production vis--vis domestic demand and hardening of international prices, prices of primary commodities, mainly food, have been on the rise in 2008-09 so far. Wheat, pluses, edible oils, fruits and vegetables, and condiments and spices have been the major contributors to the higher inflation rate of primary articles. Within the primary group, the mineral subgroup recorded the highest year-on-year inflation at 18.2 per cent, followed by food articles at 12.2 per cent and nonfood articles at 12.0 per cent. Food articles have a high weight of 15.4 per cent in the WPI basket. Including manufactured products such as sugar and edible oils, food articles contributed as much as 27.2 per cent to overall inflation of 6.7 per cent on February 3, 2007. Starting with a rate of 3.98 per cent, the inflation rate in 2008-09has been on a general upward trend with intermittent decreases. However, average inflation in the 52 weeks ending on February 3, 2009 remained at 5 per cent. A spurt in inflation like in the current year has been observed in the recent past in 1998-99, 2000-01, 2005-06, and 2007-09.

FOREIGN IMPACT

19

Oil prices The international annual average price of the Indian basket of crude (about 60 per cent of Oman/Dubai and 40 per cent of Brent), after remaining more or less stable in 2002-04 at around US$27- 28 per barrel, On August 8, 2008. To stop the hemorrhaging of public sector oil companies finances, there was an unavoidable upward revision of retail selling prices of petroproducts on June 6, 2008. The pass through to consumers was restricted to just 12.5 per cent in a three way burden sharing arrangement among consumers, Government and oil marketing companies. With the softening of international petroleum prices, domestic prices of petrol (motor spirit) and high diesel were reduced by Rs. 2 and Re.1, respectively with effect from November 30, 2008, and again by the same amounts with effect from February 16, 2009. Balance of payment In the balance of payments, in 2007-08 and in the first half of 200809, capital flows more than made up for the current account deficits of US$9.2 billion and US$11.7 billion, respectively, and resulted in reserve accretion. The current account deficit reflected the large and growing trade deficit in the last two years. Exports grew fast, but imports grew even faster, reflecting in part the ongoing investment boom and the high international petroleum price. In 2007-08, imports (in US dollar terms and customs basis) had grown by 33.8 per cent. In the first nine months of the current year, imports grew by 36.3 per cent. While petroleum imports continued to grow rapidly, non-oil import growth decelerated to a moderate 18.7 per cent in the first nine months of the current year, primarily because of high bullion prices leading to a decline in import balance, after remaining in surplus till 200720

08, has turned negative since 2008-07. Indias exports (in US dollar terms and customs basis) have been growing at a high rate of more than 20 per cent since 2008-07. During 205-06, growth of 23.4 per cent, Indias exports crossed the US$100 billion mark. During 2008-09, after a slow start, exports gained momentum to grow by an estimated 36.3 per cent in the first nine months to reach US$89.5 billion. Buovancy of exports was driven from major trading partners. FDI and FII Capital flows into India remained strong. The composition of flows, however, fluctuated from year to year. In the three-year period, 2004-07, there were large other flows (delayed export receipts and others) accounting for a sizeable proportion of net capital flows. After being outflows in the previous two years, external assistance and external commercial borrowing (ECBs) two major debt-creating flows- picked up in 2008-07. These debt flows, as a proportion of total capital flows, were 25 per cent in 2008-07 and 18 per cent in 2007-08. Foreign investment, as a proportion of capital flows, has remained in the range of 39.1 per cent to 79.3 per cent in the last four years ending in 2005-06. There was strong growth in foreign direct investment (FDI) flows (net), with three-quarters of such flows in the form of equity. The growth rate was 27.4 per cent in 2007-08 followed by 98.4 per cent in April September 2008. This was even after gross outflows under FDI with domestic corporate entities seeking a global presence to harness scale, technology and market access advantages through acquisitions overseas. FII flows, the dominant variety of portfolio flows, after remaining buoyant until 2007-08, turned into net outflows in the

21

first half of 2008-09. Fill flows are reported to have turned positive again in the second half of the current year. THE CAPITAL MARKET Bullish sentiments in the domestic capital market is foreseen. The BSE sensex, stock-index of the Bombay Stock Exchange (BSE), rallied from a low 8,929 on June 14, 2008 to an all-time intra-day high of 14,724 on February 9. 2009. The rally from the 13,000 mark to the 1400 mark in only 26 trading from the fastest ever climb of 1,000 points. India with a market capitalization of 91.5 per cent of GDP on January 12, 2009 the strength of the market micro-structure from large retail participation continued. The positive sentiments were manifest also in most indicators such as resource mobilized through the primary market. Aggregate mobilization, especially through private placements and Initial Public Offerings (IPOs), grew by 30.5 per cent to RS. 161,769 crore in calendar year 2008, with about 6 IPOs every month, on average. Net mobilization of resources by mutual funds increased by more than four-fold from Rs. 25,454 crore in 2007 to Rs. 1,04,950 crore in 2008. The sharp rise in mobilization by mutual funds was due to buoyant inflows under both income/debt-oriented schemes and growth/equity oriented schemes. The negative inflows in 2008 turned positive for the public sector mutual funds in 2007 and accelerated in 2008. Other indicators of market sentiments, such as equity returns and price/earnings ratio also continued to be strong and supportive of growth. The upbeat mood of the capital markets. Reflecting the improved growth prospects of the economy was partly also a result of steady progress made on the infrastructure front. Overall index of six core industries

22

electricity, coal, crude oil, petroleum refinery products, and cement, registered a growth of 8.3 per cent. INFRASTRUCTURE On the transport and communication front, railways maintained its nearly double-light growth in the first nine months of the current year. There was, however, a growth declaration in cargo handled at major maritime ports (both exports and imports) and airports (exports). The news of gas discoveries in the Krishna Godavari (KG) basin under New exploration and Licensing Policy (NELP) in recent months was an encouraging development in the countrys pursuit of reduced impot dependence in hydrocarbons. Investment requirements for infrastructure during the Eleventh Five Year plan are estimated to be around US$ 320 billion. While nearly 60 percent of these resources would come from the public sector and/or through public-private partnership (PPP). The potential benefits expected from PPP are : cost-effectiveness, higher productivity, accelerated delivery, clear customer focus, enhanced social service, and recovery of user charges. Further, the additionally of resources that PPP would bring, along with the value for money continues to remain critical. Based on the number of projects that have been approved or are under consideration, it is estimated that a leveraging of nearly six times could be achieved through this route. Services sector growth has continued to be broad-based. Among the three sub-sector of services, trade, hotels, transport and communication services has continued to boost the sector by growing at double-digit rates for the forth successive year (table 1.2). impressive progress in information technology (IT) and IT-enabled services, both rail and road traffic, and fast

23

addition to existing stock of telephone connections, particularly mobile, played a key role in such growth. Growth in financial services (comprising banking, insurance, real estate and business services), after dipping to 5.6 percent in 2005-2008 bounced back to 8.7 percent in 2008-07 and 10.9 percent in 2007-2008. the momentum has been maintained with a growth of 11.1 percent in 2008-2009. INDUSTRIAL ANALYSIS Industrial analysis growth follows a pattern. This replicates the banking industry monitory policy, CPR, SLR, and the flow of the industry. The Industrial involves industry life-cycle analysis, investment implication, structure and characteristics of an industry. The lower contribution of industry to GDP growth relative to services in recent year is partly because of its lower share in GDP, and does not adequately capture the signs of industrial resurgence. Growth on industrial sector, from a low of 2.7% in 2005-2007, revived to 7.1% and 7.4% in 2004-2007 and 2007-2008, respectively, and after accelerating to over 9.5% in the next two years, touched 10.0% in 2008-2009. The growth of industry, as a proportion of the corresponding growth in services, which was78.9% on the average between 1991-1992 and 19992000, improved to 88.7 % in the last seven years. Within industry, the growth impulses in the sector seem to have spread to manufacturing. Industrial growth would have been even higher, had it not been for a relatively disappointing performance of the other two sub-sector, namely mining and quarrying, and electricity, gas and water supply.

24

Since 1951-1952, industry has never consistently grown at over 7.0% per year for more than three years in a row before 2008-2007. YoY, manufacturing, accounting to the monthly index of industrial production (IIP) available until 2008, has been growing at double digit rates every month since march 2008, with the solitary exception of the festive month of October. The current growth phase shows a sharp rise in the rate of investment in the economy. Investment reflects a high degree of business optimism. The revival in gross domestic capital formation (GDCF) that commenced in 2004-2007 has been followed by a sharp rise in the rate of investment in the for four consecutive years. The earlier statement of GDCF for 2008-2007 of 30.1%, released by CSO in their advance estimates, Now stand upgraded to 31.5% in the quick estimates. This sharp increase in the investment rate has sustained the industrial performance and reinforces the outlook for growth COMPANY ANALYSIS Company analysis explains of the profile of SBI and ICICI bank and then deals with the ratio analysis of both the banks. The company analysis is the study of variable of that influence the future of firm both qualitatively and quantitatively. The purpose of the company analysis is to know the intrinsic value of a share of a company. TECHNICAL ANALYSIS The technical analysis analyses the buying and selling the pressure, which govern the price trend. It helps the investors of buy cheap and sell high, regardless, of the type of company the investors chooses. The technical analysis is frequently use as a supplement to fundamental analysis is concerned with a critical study of the daily or weekly price volume data of
25

index comprising level shares. It complies a study of market itself and not of the various external factors which affect the market. According to technical analysis, all relevant factors get reflected in the volume of the stock exchange transaction and the level of share prices.

*****

26