COMPREHENSIVE STUDY

ON FINANCIAL ANALYSIS
OF HDFC BANK

Prepared By-
SHRUTI
MBA-2nd
Roll No-229
Founder of HDFC
Hasmukh Bhai parekh
In 1956 he began his financial
affairs.

In 1992, government of India

honored him with Padma
Bhushan.

In 1994 he abode the earth.

 HDFC BANK
• Housing Development Finance Corporation
• HDFC Bank was incorporated in August 1994
• Among the first in new generation commercial banks
• Was amongst the first to receive an 'in-principle'
approval from the Reserve Bank of India (RBI) to
set up a bank in the private sector, as part of the
RBI's liberalization of the Indian Banking Industry in
1994.
• Registered office in Mumbai, India
• Listed in NSE and BSE
BOARD OF DIRECTORS

Mr. Jagdish Kapoor , chairman of HDFC

Bank.

Mr. Aditya Puri, Managing director

Keki Mistry, Managing Director

Mr. Harish Engineer, Executive directors

Mr. A Rajan, Country Head-Operations

Mr. Rahul Bhagat, Vice president

 HDFC Focuses on
• Understanding the needs of customers
and offering them superior product and
service.
• Leveraging technology to service
customers quickly and conveniently.
• To create quality of consumers and not
quantity of consumers.
• Providing and enabling environment to
foster growth and learning for the
employees.
 THE THREE MAJOR FUNCTIONS OF
HDFC BANK

HDFC Bank deals with three key business

segments:-
 Retail Banking Services
 Wholesale Banking Services
 Treasury Operations
 Capital Structure
• The authorized capital of HDFC Bank is
Rs550 crore (Rs5.5 billion).
• The paid-up capital is Rs424.6 crore (Rs.4.2
billion).
• The HDFC Group holds 19.4% of the
bank's equity
• Roughly 28% of the equity is held by
Foreign Institutional Investors (FIIs) and the
bank has about 570,000 shareholders
NETWORK
761 branches
1977 ATM’s in the
country
327 cities in India
16 branches in Middle
east
6 in Africa
Representative offices
in Hong Kong, New
York, London &
Singapore
Accounts of Religious institutions
• Shree siddhivinayak Ganpat
• Dargah khwaja sahib ,Ajmer
• Laxmi narayan mandir Delhi
• Mata vaishno devi Mandir
• Jagan Nath temple
• Shirdi Sai baba
• Golden temple
• Amarnath temple
ASSOCIATE COMPANIES
NEW LOGO AND TAG LINE
 SERVICES
• ATM
• Credit Cards
• Net Banking
• Phone Banking
• Mobile Banking
• Loans
 Achievements
• HDFC Bank merged with TIMES BANK in
2000.
• HDFC Bank wins the Asian Banker Best Retail
Bank in India Award 2008 for outstanding
performance.
• HDFC Bank chosen as one of Asia Pacific’s
best 50 companies by Forbes magazine.
• 'Best Bank in the Private Sector 2008.'
• HDFC Bank ties up with Qatar National Bank.
• HDFC Bank merged with CENTURION BANK
OF PUNJAB in 2007.
 VISION
• Increase market share in India’s banking sector

• Leverage technology platform

• Maintain standards for asset quality

• Focus on high earnings growth with low volatility

• Develop innovative products and services

 MISSION

• Mission is to be "a World Class Indian

Bank“
• Benchmarking ourselves against:
» international standards and
» best practices in terms of product
offerings, technology, service levels,
risk management and audit &
compliance.
 VALUES
• Our business philosophy is based on four
core values –

• Customer Focus
• Operational Excellence
• Product Leadership
• People
 OBJECTIVE OF THE STUDY
• The basic objective of studying the ratios of the
Bank is to know the financial position of the Bank.
• To draw the correct picture of the financial
operations of the Bank in terms of liquidity,
solvency, turnover, profitability etc.. 
• To make vertical comparison of financial
statements.
• To find out the reasons for unsatisfactory results.
1. Primary objectives
2. Secondary objectives
 DATA BASE
• PRIMARY DATA
• SECONDARY DATA
• RATIO ANALYSIS
• CLASSIFICATION OF RATIOS

Liquidity
Liquidityratio
ratio

Solvency
Solvencyratio
ratio Ratio
RatioAnalysis
Analysis Turnover
Turnoverratio
ratio

Profitability
Profitabilityratio
ratio
Current Ratio
C u rren t R atio

1.11 1.1
1.1
1.09 1.08
CR

1.08 1.07 R atio

1.07
1.06
1.05
2007 2008 2009
Year

Interpretation
If the C.R. is less than 2: 1, it indicates lack of liquidity and shortage
of working capital. But a much higher ratio, even though it is
beneficial to the short-term creditors, is not necessarily good for the
company. A much higher ratio than 2 : 1 may indicate the poor
investment policies of the management. So liquidity of Bank is
satisfactory
Quick Ratio
QUICK RATIO

1.6
1.4
1.2
1
0.8 QUICK RATIO
0.6
0.4
0.2
0
2007-08 2008-09 2009-2010

INTERPRETATION
An acid test or quick ratio of 1:1 is considered satisfactory.
As above diagram and calculation shows that quick ratio is
more than 1:1. So it is satisfactory. But it is constantly
decreasing. So it should be considered that it shouldn’t
declines
Interest Coverage ratio-
IC R

2.5 2.38
2.4
2.3
IC R

2.2 2.09 R atio

2.1 2
2
1.9
1.8
2007 2008 2009
Year

Interpretation
Since this Ratio indicates the interest paying capability of
firm and ideal Ratio is 6 to 7 times. So interest paying
capacity of the firm is moderate
 Net profit ratio
N P R atio

25
20.58
20 17
15.72
N P R a ti o

15
R atio
10

0
2007 2008 2009
Year

Interpretation
This Ratio measures the rate of net profit earned on sales. It
helps in determining the overall efficiency of the business
operations. Decrease in the ratio over the previous year affect
the overall efficiency and profitability of the business
Gross profit ratio
G P R atio

42 40.98
38.57
G P R atio

40
37.22
38 R atio
36
34
2007 2008 2009
Ye a r

Interpretation
This ratio is compared with earlier years and there is a
decline in gross profit ratio from such comparison. It may
be concluded that price of material purchased ,wages and
other direct charges may have gone up but the selling
price may not have gone up in proportion to increase in
costs
 SWOT analysis
Strengths
• Support of various promoters
• Large share of low-cost deposits
• High level of services
• Knowledge of Indian Market
• Right strategy for right product
• High degree of customer satisfaction
• Dedicated work force aiming at making long-
term career in field
Weaknesses
• Customer service staff needs training
• Sectoral growth is constrained by low
employment levels and competition for staff
• Account opening and delivery of cheque book
take comparatively more time

Opportunities
• Growing Indian banking sector.
• People are becoming more service oriented
• Door step services
Threats
• From various competitors
-Foreign banks
-govt. banks
• Future market trends..
• Lack of infrastructure in rural areas could
constrain investment
• The bank has started facing competition from
players like SBI, PNB Bank in the finance market
itself. This reduces the profit margins in the
future
 FINDINGS
• After analyzing the ratios and financial statement I
can conclude that BANK’s overall performance is
good which is also reflected by its P/E ratio but in
certain areas it need improvement. They are
market leader but their nearest competitor is very
close with respect to market share. So if they
want to compete with them it is necessary to
utilize their resource in best way.
• As in case of current ratio its ratio is almost half of
our nearest peers. For current year the NP margin
is reduce, and market situation is very much price
competitive so if they want to decrease the gap of
NP margin they should try to increase revenue by
manufacturing.
 FINDINGS
• When I see the return with respect to
asset and equity their ratio is one-third as
compare to last year ratio.
• Equity or capital investment has increased
in the organization still it is showing a
decrease in earnings per share thus return
on capital employed is also less as
compared to the previous year.
 Recommendations
• Better inventory management is required
because it’s consistently decreasing which
is an obstacle to be in competition
• They are market leader but their nearest
competitor is very close with respect to
market share. So if they want to compete
with them it is necessary to utilize their
resource in best way
 Recommendations
• Equity or capital investment has increased in
the organization still it is showing a decrease
in earnings per share thus return on capital
employed is also less as compared to the
previous year
• For current year the GP margin and NP
margin it is not with that pace which shows
that Bank need to reduce its other expenses
 CONCLUSION
• Success is achieved by those who try where there is
nothing to lose by trying and a great deal to gain if
successful, by all means try”
•The study may be a helpful step ahead in increasing the
morale of each Employee
• By studying this, Bank will can come to know that what
effective measure can be take to maintain the effective use of
resources.
• Such results and conclusions are definitely helpful in order
to achieve goals of the organization in this modern business
world.
•There is a lot to be said for valuing a company, it is no easy
task. I hope that I have helped shed some light on this topic
and that you will use this information to make educated
investment decision.
 BIBLIOGRAPHY
 Books
– MANAGEMENT ACCOUNTANCY - PILLAI &
BAGAVATI
– Research Methodology (2nd Edition), C.R.
Kothari
– FINANCIAL MANAGEMENT - I. M. PANDEY

 Websites
• www.hdfcbank.com
• www.google.com
• www.scribd.com