About State Bank of India State Bank of India (SBI) is the largest bank in India.

The bank traces its ancestry back through the Imperial Bank of India to the founding in 1806 of the Bank of Calcutta, making it the oldestcommercial bank in the Indian Subcontinent. The Government of India nationalised the ImperialBank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it theState Bank of India. In 2008, the Government took over the stake held by the Reserve Bank of India. SBI provides a range of banking products through its vast network in India and overseas,including products aimed at NRIs. The State Bank Group, with over 16000 branches, has thelargest branch network in India. With an asset base of $250billion and $195 billion in deposits,it is a regional banking behemoth. It has a market share among Indian commercial banks ofabout 20% in deposits and advances, and SBI accounts for almost one fifth of the nations loans. SBI has tried to reduce its over-staffing through computerizing operations and Golden handshakeschemes that led to a flight of its best and brightest managers. These managers took theretirement allowances and then went on the become senior managers at new private sector banks. The State bank of India is 29th most reputable company in the world according to Forbes

Fundamental Analysis: Fundamental analysis refers to the study of the core underlying elements that influence the economy of a particular entity. It is a method of study that attempts to predict price action andmarket trends by analyzing economic indicators, government policy and societal factors within abusiness cycle framework. The fundamental analysis of a company involve the s followingparameters: 1. Macroeconomic Analysis 2. Industry Analysis 3. Company Analysis How does an investor determine if a stock is undervalued, overvalued, or trading at fair marketvalue? With fundamental analysis, this may be done by applying the concept of intrinsic value. Ifall the information regarding a corporation's future anticipated growth, sales figures, cost ofoperations, and industry structure, among other things, are available and examined, then theresulting analysis is said to provide the intrinsic value of the stock. To a fundamentalist, the market price of a stock tends to move towards its intrinsic value. If theintrinsic value of a stock is above the current market price, the investor would purchase thestock. However, if the investor found through analysis that the intrinsic value if a stock wasbelow the market price for the stock, the investor would sell the stock from their portfolio or takea short position in the stock.

1. Macroeconomic Anal i Change in rates by RB tt i io, RB keeps on changing rates such as Repo Rate,Reverse Looki Repo Rate and Cash Reserve Ratio. These rates have a direct relation withBanks performance and in turn share prices are linked with banks performance. Thus, achange i n these rates or even a speculation of change in these rates affects share prices. Global Analysis: Any change in global economy or in other words, global changes also affects Indianeconomy. For example: The recession was first observed in USA and later on it caught itslead in other countries too. When it entered India, the share market crashed literally. Itaffected many banks as ICICI and others, resulting in loss of peoples confidence towardsbanks. Change in Governments Policy: The government takes desired steps and keeps on reviewing its policies, rules, regulationsand procedures. A change in FDI and FII inflow restrictions, entry exit barriers forforeign banks in India, EXIM regulations, change in Basel norms, etc form a part ofimportant government policies. For example if government allows entry of foreign banksin India, then competition would rise, and it may happen that those foreign banks mayoutperform and leave our own banks far behind. Thus, some restriction would follow andthis will definitely affect share prices. Effect of Inflation on banking operations: Several economists have found that countries with high inflation rates have inefficientlysmall banking sectors and equity markets. This effect suggests that inflation reduces banklending to the private sector, which is consistent with the view that a sufficiently high rateof inflation induces banks to ration credit. Effect of monetary policy on Banking Sector: Monetary policy affects banking sector in many ways. One way is through creditmarkets. Because of imperfect information, incomplete contracts and imperfect bankcompetition, monetary policy may affect banks loan supply. In particular, expansivemonetary policy may increase banks loan supply directly (bank lending channel , orindirectly by improving borrowers net worth and, hence, by reducing the agency costs oflending.

2. Industry Analysis: Life Cycle Analysis: Bank plays an important role in the economic development of the country. The entire commercialand industrial activities are well knitted with the banks. One cannot imagine the cessation of thebanking activities even for a day. There may be an economic crisis in the country if the banksstop functioning for some days. In the early days, the banking business was confined to receiving of deposits and lending of money. But the modern bankers undertake wide variety of functions to assist their customers. Banks are like any other business in that they produce goods and services to customers. Like any other businesses, their products have life c ycles.Cheques are in a decline phase of their life cycle and use of cheques is declining rapidly andbeing replaced by electronic bill pay and debit cards. Internet Banking and Electronic Bill payare in their growth phase as more and more customers are using these services. Cards or ChequeCards are in their maturity phase as they are accepted by nearly everyone. So overall, the banking industry is in a GROWTH PHASE, as new measures are being adopted overtime so as to make transactions speedy and easy

Porters five forces analysis:

1.Threat of New Entrants. The average person can't come along and start up a bank, butthere are services, such as internet bill payment, on which entrepreneurs can capitali e.Banks are fearful of being squeezed out of the payments business, because it is a goodsource of feebased revenue. Another trend that poses a threat is companies offering otherfinancial services. Also, the possibility of a mega bank entering into the market poses areal threat. 2.Power of Suppliers. The suppliers of capital might not pose a big threat, but the threatof suppliers luring away human capital does. If a talented individual is working in asmaller regional bank, there is the chance that person will be enticed away by biggerbanks, investment firms, etc. 3.Power of Buyers. The individual doesn't pose much of a threat to the banking industry,but one major factor affecting the power of buyers is relatively high switching costs. If aperson has a mortgage, car loan, credit card, checking account and mutual funds with oneparticular bank, it can be extremely tough for that person to switch to another bank. In anattempt to lure in customers, banks try to lower the price of switching, but many peoplewould still rather stick with their current bank. On the other hand, large corporate clientshave banks wrapped around their little fingers. Financial institutions - by offering betterexchange rates, more services, and exposure to foreign capital markets - work extremelyhard to get high-margin corporate clients.

4.Availability of Substitutes. There are plenty of substitutes in the banking industry.Banks offer a suite of services over and above taking deposits and lending money, butwhether it is insurance, mutual funds or fixed income securities, chances are there is anon-banking financial services company that can offer similar services. On the lendingside of the business, banks are seeing competition rise from unconventional companies.Sony, General Motors and Microsoft all offer preferred financing to customers who buybig ticket items. 5.Competitive Rivalry. The banking industry is highly competitive. The financial servicesindustry has been around for hundreds of years and just about everyone who needsbanking services already has them. Because of this, banks must attempt to lure clients away from competitor banks. They do this by offering lower financing, preferred ratesand investment services. The banking sector is in a race to see who can offer both the bestand fastest services, but this also causes banks to experience a lower ROA. They the nhave an incentive to take on high-risk projects. In the long run, we're likely to see moreconsolidation in the banking industry. Larger banks would prefer to take over or mergewith another bank rather than spend the money to market and advertise to people .

Company Analysis:

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Attribute PE ratio EPS (Rs) Sales (Rs crore) Face Value (Rs) Net profit margin (%) Last dividend (%) Return on average equity

Value Date 18.60 01/07/11 130.15 Mar, 11 21,721.35 Mar, 11 10 8.55 Mar, 11 300 11/05/11 12.71 Mar, 11