ASSIGNMENT ON FUNDAMENTAL ANALYSIS OF IDBI

BY-

LALITH G

0911PGDM092
 ECONOMY ANALYSIS:

GDP Growth Rate:

Economic growth is the increase in value of the goods and services produced by an
economy. It is conventionally measured as the percent rate of increase in real gross domestic
product, or GDP. Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order
to net out the effect of inflation on the price of the goods and services produced. In economics,
"economic growth" or "economic growth theory" typically refers to growth of potential output,
i.e., production at "full employment," which is caused by growth in aggregate demand or
observed output. As economic growth is measured as the annual percent change of National
Income it has all the advantages and drawbacks of that level variable.

The Gross Domestic Product (GDP) in India expanded at an annual rate of 8.80 percent
in the last reported quarter. From 2004 until 2010, India's average quarterly GDP Growth was
8.37 percent reaching an historical high of 10.10 percent in September of 2006 and a record low
of 5.50 percent in December of 2004. India's diverse economy encompasses traditional village
farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of
services. Services are the major source of economic growth, accounting for more than half of
India's output with less than one third of its labor force. The economy has posted an average
growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage
points. This page includes: India GDP Growth Rate chart, historical data and news.

Sector Wise Contribution to GDP

India is a vast country, so the sectors contributing to the country's GDP is also big in
numbers. Various sectors falling under the India GDP composition includes food processing,
transportation equipment, petroleum, textiles, software, agriculture, mining, machinery,
chemicals, steel, cement and many others. Agriculture is the pre dominant occupation in India,
employing more than 50% of the population. The service sector accounts for employing more
than 25% while the industrial sector accounts for more than 10%.
 Indian Economy is expected to grow between 6% and 7% for the FY 2010-11. In 2008,
growth has slackened to below 7% after achieving spectacular growth. In first half of 2009,
economy responded positively and the economic indicators are showing strenght in the
overall economy, though the nasty monsoon has modestly hampered the growth and rising
risk of inflation would be a worrisome for the RBI while taking the monetary decision.

Details 2007 2008 2009 2010 2011

(Figures in per cent)
Real GDP Growth 9.6 5.1 6.6 8.3 8.5
Inflation 5.4 7.4 4.6 7.7 6.1
Consumer Price Index 6.2 9.1 12.3 10.2 6.3
Wholesale Price Index 4.7 8.4 3.5 7.0 6.2
Short-Term Interest Rate* 8.9 9.6 4.8 6.9 7.9
Long-Term Interest Rate** 7.9 7.6 7.1 7.8 8.1
Fiscal Balance (per cent of GDP)^ -4.2 -8.8 -10.1 -9.0 -8.1
Current Account Balance (per cent of
-1.4 -2.5 -1.9 -2.0 -1.8
GDP)

Composition of India’s GDP by Sector.

Amount in Crores of Indian Rupees (10 Million)

Agriculture, Forestry & Fishing 876,563.00

Minning Quarrying 129,671.00
Manufacturing 799,513.00
Electricity, Gas & Water Supply 80,440.00
Contruction 437,768.00
Trade, Hotel, Transport & Communication 1,274,534.00
Financing, Insurance, Real Estate & Bus Service 700,943.00
Community, Social & Personal Services 690,373.00
Total Annual GDP 4,989,804.00

Graphical Representation of India’s GDP Composition

GDP Composition by Sector

Sources: World Bank, International Monetary Fund, OECD and VMW Analytic Services. This
data has been provided from the different sources and VMW does not have any guarantee for the
accuracy.

Per capita Income:

Per capita Income means how much an individual earns, of the yearly income that is
generated in the country through productive activities. It means the share of each individual
when the income from the productive activities is divided equally among the citizens. Per capita
income is reported in units of currency. Per capita income reflects the gross national product of a
country. Per capita income is also a measure of the wealth of a population of a nation when
compared with other countries. It is expressed in terms of commonly used international currency
such as Euro, Dollars because these currencies are widely known.

Industrial Analysis

Financial banking is the science of managing money and other assets pertaining to a specific
business. We all know that banks offer basic loans, deposits and financial advice, but they also
facilitate transactions on sophisticated financial instruments such as private equity, bonds and
mutual funds. Most top performing candidates typically view careers in Banking as the pinnacle
of achievement, and sectors such as treasury, equity trading, investment banking and private
banking are viewed as the most lucrative jobs for new graduates.
In addition to traditional banks, other financial institutions such as credit unions, trust companies,
mortgage loan companies, insurance companies, brokerage firms and asset management firms
also offer a host of financial advice. Hence, when viewing the opportunities in the sector, one
must also carefully consider these other specialized financial institutions.
Performance
The financial crisis of 2007-2008 was triggered by an insolvent United States banking system
(catalysts of which were sub-prime lending, over leveraging and poor regulation) resulting in the
collapse of large financial institutions, the bailout of banks by national governments and
downturns in stock markets around the world.
The destabilization of the banking sector in the U.S. had a domino effect on the global financial
industry, with effects felt in Europe, the Middle East and the Asia Pacific. 24 months later, the
global financial industry still hasn’t regained its lost glory, and even countries with deep pockets
such as the U.A.E. and Singapore have exhibited limited sectoral growth.
The Indian financial industry underwent rapid transformation post liberalization in the early 90’s,
resulting in greater inflow of investments from FII's into the capital market. Despite the foray of
foreign banks in the country, nationalized banks continue to be the biggest lenders in the country,
primarily due to their size and penetration of networks. In fact, Industry estimates indicate that
over 80% of commercial banks in India are in the public sector and of the 50-odd private banks,
less than half are foreign banks. The Reserve Bank of India is the Indian equivalent of the Fed.
The opportunities in this industry remain extremely promising due to its relatively low
penetration of both basic as well as advanced financial products.
Though the Indian finance and banking industry did suffer significantly during the past 2 years, it
was relatively sheltered from the triggers of the global melt-down, suffering instead due to
monies from FII’s drying up, falling interest rates, rapidly rising inflation and poor investor
confidence. Annual reports suggest that most of the larger Banks have begun to pick up from
where they left off, albeit with more caution, and most industry pundits are optimistic about the
current fiscal year.
Growth Potential
There are a range of retail jobs to suit most skill sets, including banking officer, probationary
officer, loan agent, assessor, mortgage loan underwriter, loan processing officer, accountant,
product marketing and sales executive, and customer service executive among others. However,
job security is not very high in retail banking as many players suffer from shrinking margins and
poor customer retention due to increasing competition and limited market differentiation, leading
to lay-offs. Meanwhile, there are also more skilled jobs available such as actuarist, equity
researcher, forex trader, securities linked products developer and portfolio manager for those
with the relevant knowledge and ambition. The biggest opportunity in this sector remains in
improving information flow to customers. Hence, there is a growing emphasis on in-house
research and market intelligence.
Future Prospects
In the upcoming 12 months, hiring is likely to remain robust. Many banks are investing in
training programs to upgrade worker skills to enhance their competitive edge in anticipation of
the segment once more regaining its rightful place as the harbinger of development and progress.

COMPANY ANALYSIS

IDBI Bank Limited (IDBI) is an India-based commercial bank, which provides various
retail and corporate banking products and services to its customers. The company offers a
range of deposit accounts, such as savings, current, fixed, and pension accounts; various
loans, including home, education, personal, travel, and reverse mortgage loans;
institutional banking services; and NRI services, as well as provides tax, stamp duty, bill,
and online payments. The bank operates in three segments: Retail Finance, Corporate
Finance and Treasury Operations. Its principal operating subsidiaries, includes IDBI
Capital Market Services Limited, IDBI Homefinance Ltd, IDBI Intech Ltd and IDBI
Gilts Ltd.

IDBI Bank Ltd. Key Recent Developments

Apr 06, 2010: IDBI Bank Chooses Venture Infotek For Internet Payment Gateway
Services Launch
Jan 19, 2010: IDBI Bank Eyes Federal Bank For Acquisition
Sep 07, 2009: IDBI, Union Bank To Commence Asset Management Operations

This comprehensive SWOT profile of IDBI Bank Ltd. provides you an in-depth strategic
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Company IDBI Bank Ltd

Profile:
Ticker: 500116
Exchanges: BOM
2010 Sales: 178,700,000,000
Major Industry: Financial
Sub Industry: Commercial Banks
Country: INDIA
Employees: 12213

Financials (Standalone)

Latest Quarterly/Halfyearly
As on(Months) 30-Jun-10(3) 30-Jun-09(3) % Change
Interest Income 42889.80 34633.00 23.84
Other Income 4661.80 7556.10 -38.30
Total Income 47551.60 42189.10 12.71
Interest Expenses 34378.00 31468.60 9.25
Other Expenses 4862.00 3159.00 53.91
Provision & Contingencies 5017.70 5603.20 -10.45
OPBDT 3293.90 1958.30 68.20
Depreciation 0.00 0.00 --
Extra-Ordinary / Cash Adjustment 0.00 0.00 --
Provision for Tax 785.00 240.00 227.08
After tax Profit 2508.90 1718.30 46.01
Equity Capital 7248.90 7247.80 0.02
Reserves 0.00 0.00 --
Notes to Accounts Click here Click here Click here
Income Statement
31-Mar-10(12) 31-Mar-09(12) 31-Mar-08(12)
Profit/Loss A/C Rs. mn %OI Rs. mn %OI Rs. mn %OI
Interest Income Earned 152726.33 86.96 116316.27 89.33 80208.41 83.06
Commission, Exchange and Brokerage Income 12254.48 6.98 7252.99 5.57 3489.82 3.61
Lease Income 0.00 0.00 0.00 0.00 0.00 0.00
Dividend Income 183.63 0.10 139.32 0.11 82.93 0.09
Miscellaneous Income 10471.45 5.96 6506.93 5.00 12781.93 13.24
Other Income 22909.56 13.04 13899.24 10.67 16354.67 16.94
Total Income (OI) 175635.88 100.00 130215.51 100.00 96563.08 100.00
Interest Expenditure 130052.17 74.05 103057.15 79.14 73644.13 76.27
Employee Expenditure 7569.90 4.31 5692.43 4.37 3846.07 3.98
Depreciation 909.83 0.52 527.02 0.40 835.03 0.86
Other Operating Expenditure 9834.52 5.60 7159.70 5.50 4906.73 5.08
Provision and Contingencies 16958.13 9.66 5193.83 3.99 5104.07 5.29
Total Expenditure 165324.55 94.13 121630.12 93.41 88336.03 91.48
Pretax Income 10311.33 5.87 8585.39 6.59 8227.05 8.52
Tax 0.00 0.00 0.00 0.00 932.50 0.97
Extra Ordinary and Prior Period Items Net 0 0.00 0 0.00 0 0.00
Net Profit 10311.33 5.87 8585.39 6.59 7294.56 7.55
Adjusted Net Profit 10311.33 5.87 8585.39 6.59 7294.56 7.55
Dividend - Preference 0.00 0.00 0.00 0.00 0.00 0.00
Dividend - Equity 2174.59 1.24 1811.95 1.39 1449.53 1.50

Balance Sheet
31-Mar-10 %BT 31-Mar-09 %BT 31-Mar-08 %BT
Equity Capital 7248.62 0.31 7247.81 0.42 7247.64 0.55
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Share Capital 7248.62 0.31 7247.81 0.42 7247.64 0.55
Reserves and Surplus 94383.98 4.04 86973.58 5.04 80955.01 6.19
Deposits 1676670.78 71.78 1124010.13 65.20 729979.85 55.85
Borrowings 477094.79 20.43 444170.39 25.76 438229.63 33.53
Other Provisions and Liabilities 80306.18 3.44 61604.04 3.57 50514.79 3.87
Capital and Liabilities (BT) 2335720.17 100.00 1724023.21 100.00 1306943.93 100.00
Fixed Assets 29969.55 1.28 28241.10 1.64 27659.79 2.12
Investments 733454.63 31.40 500475.96 29.03 328029.28 25.10
Advances 1382018.53 59.17 1034444.78 60.00 822126.89 62.90
Cash & Money at Call 145828.35 6.24 112193.19 6.51 87587.72 6.70
Other Current Assets 44449.10 1.90 48668.18 2.82 41540.25 3.18
Properties and Assets (BT) 2335720.17 100.00 1724023.21 100.00 1306943.93 100.00

Ratio Analysis
As on 31-Mar-09 31-Mar-08 31-Mar-07

Profitablility
Interest Income/Total Income (%) 89.30 83.60 86.10
Non Interest Income/Total Income (%) 10.70 16.40 13.90
Reported Net Profit/Total Income (%) 6.60 7.60 8.50
Net Interest Income/Total Income (%) 10.20 7.00 8.90
Net Interest Margin (%) 1.30 0.80 1.10

Return Related
ROE (%) 9.10 8.30 7.60
ROA (%) 0.50 0.60 0.60

Leverage & Capital Measures

Customer loans/deposits (%) 92.00 112.60 144.10
Investments/Deposits (%) 44.50 44.90 59.20
Total Liabilities/Networth 23.20 19.30 16.70

Growth (%)
Growth in Interest Income 44.66 26.72 17.93
Growth in Interest Expenses 39.94 29.48 13.73
Growth in Employee cost 48.87 35.17 --
Growth in PAT 17.70 15.73 12.38
Growth in Deposits 53.98 68.38 66.74
Growth in Borrowings 1.36 3.35 --

Per Share
Book Value Per Share (Rs) 102.60 93.50 85.60
Earnings Per Share (Rs) 11.80 10.10 8.70
Dividend Per Share (Rs) 2.50 2.00 1.