Operating Profit

Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money

Rs. Crore Mar ' 08 Mar ' 09 Mar ' 10 Mar ' 11

7,774.36 10,962.90 14,604.94 14,578.54 16,217.24 1,544.86 2,350.09 2,752.83 3,793.56 1,193.09 2,093.87 3,462.46 3,803.73 5,706.85 2,034.80 3,022.76 4,776.35 3,928.87 5,407.91 2,999.92 3,875.53 6,042.24 4,863.44 5,552.30 3,941.77 5,373.98 6,513.14 7,460.57 7,380.82 5,306.84

18,000.00 16,000.00 14,000.00 12,000.00 Rs.Crore 10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 0.00 Mar' 07 Mar' 08 Mar' 09 Years Mar' 10 Mar' 11 State Bank of India Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Operating Profit- The profit earned from a firm's normal core business operations. This value does not include any profit earned from the firm's investments (such as earnings from firms in which the company has partial interest) and the effects of interest and taxes. It is also known as "earnings before interest and tax" (EBIT). Calculated as:

Inference Operating profit for all the companies have generally shown a rising trend in earlier periods, i.e., around till 2008-09, thereafter, it exhibits a declining trend in operating profit for most of the companies. The major reason behind such trend could be the global economic recession of 2008 which affected nearly all the major sectors and industries at world level.

Net profit
Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money

Rs. Crore Mar ' 08 Mar ' 09 Mar ' 10 Mar ' 11 7,370.35 4,241.68 4,433.50 3,923.75 5,151.38 3,388.49

4,541.31 6,729.12 1,026.46 1,435.52 1,540.08 2,048.76 1,141.10 1,590.12 3,110.22 4,157.73 627.23 1,071.03

9,121.23 9,166.05 2,227.20 3,058.33 3,090.88 3,905.36 2,244.35 2,947.77 3,758.13 4,024.98 1,815.36 2,514.53

10,000.00 9,000.00 8,000.00 7,000.00

Rs.Crore

6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 0.00 Mar' 07 Mar' 08 Mar' 09 Years Mar' 10 Mar' 11

State Bank of India Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Net Profit- Net profit is a measure of the profitability of a venture after accounting for all costs. In accounting, net profit is equal to the gross profit minus overheads minus interest payable plus/minus one off items for a given time period (usually accounting period). Net profit = Sales revenue - Total costs Inference- Net profit has shown a similar trend to that exhibited by operating profit in case of big industry players like SAIL and Tata Steel where it had risen in the first half upto 2008-09 and then fell down afterwards under the impact of global economic recession. The profitability situation is much worse for small industry players like Ispat industries, Essar Steel, JSW, etc. Especially Ispat Industries has shown a negative trend or consequtive losses over past five years. The reasons could be relatively small scale of operations and new inception in the market for these companies as compared to the old and well established giants like Tata Steel, SAIL, etc.

Earning Per Share (EPS)

Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money

Rs. Mar ' 08 106.56 39.41 64.98 44.85 37.37 29.94 Mar ' 09 143.67 61.14 98.03 52.68 33.76 50.57 Mar ' 10 144.37 83.96 123.86 64.33 36.10 62.06 Mar ' 11 130.15 108.33 139.94 84.42 44.73 82.54

86.29 28.18 48.84 35.77 34.59 23.40

160 140 120 100 Rs. 80 60 40 20 0 Mar' 07 Mar' 08 Mar' 09 Years Mar' 10 Mar' 11 State Bank of India Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation:

Earning Per Share (EPS) - This helps to determine the market price of equity shares of the company and in estimating the companys capacity to pay dividend to its equity shareholders. Earning Per Share (EPS) = Net Profit after Tax & Pref. Dividend No. of Equity Shares Outstanding Inference- Earning per share remained stable and low over the years for majority of the companies except Jindal Steel & Power Ltd. and RINL whose EPS figures have been relatively higher the then the rest of the companies. The major reasons for such disparity could be JSPL, which also produces electricity besides power has been benifited by the tremendous rise in demand for power over the years, whereas RINL is a wholly government owned enterprise and thus, have a lower equity share volume as compared to other public limited companies, this results in a high EPS coupled by strong growth and consolidated market share for the company.

Ratio Analysis Ratio analysis is one of the powerful tools of the financial analysis. A ratio can be defined as the indicated quotient of two mathematical expressions, and as the relationship between two or more things. Ratio is, thus, the numerical or an arithmetical relationship between the two figures. It is expressed where one figure is divided by another. The major types of financial ratios are: i. ii. iii. iv. v. vi. vii. viii. Profitability Ratios Turnover Ratios Coverage Ratios Cash Flow Ratios Leverage Ratios Liquidity Ratios Payout Ratios Component Ratios

Profitability Ratios

Operating margin (%)

Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money

(in %) Mar ' 08 19.29 15.94 21.74 30.78 14.45 23.25 Mar ' 09 19.50 18.20 21.80 19.87 14.13 22.13 Mar ' 10 16.96 20.27 24.63 24.36 16.95 25.58 Mar ' 11 16.97 22.49 21.85 30.58 22.80 27.43

17.72 16.17 19.41 33.15 13.33 21.84

35 30 25 State Bank of India (in%) 20 15 10 5 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11 Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Operating Profit Ratio- This ratio establishes the relationship between operating profit and sales. This ratio indicates the portion remaining out of every rupee worth of sales after all operating costs and expenses have been met. Operating Profit Ratio = Operating Profit X 100

Net Sales Inference- The operating profit margin over the last five years had been affected by the general economic conditions. Thus, initially when the conditions were favorable we see a growth in operating margin till 2008-09. After that the operating margin was affected by the global recession and thus, consecutively came down in the second half of data period.

Gross profit margin (%)

Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money
(in %)

Mar ' 08 18.09 14.17

20.67

Mar ' 09 18.48 16.81

20.93

Mar ' 10 15.88 19.06

23.72

Mar ' 11 15.93 21.48

20.99

16.35 14.14
17.80

30.50 11.41 19.79

28.58 12.99 21.44

18.05 12.36 20.74

22.39 15.06 24.06

28.54 21.06 25.93

35 30 25 State Bank of India (in%) 20 15 10 5 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11 Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Gross Profit Ratio This ratio indicates the gross margin on trading. The higher is the ratio, the better it is. Gross Profit Ratio = Gross Profit X 100 Net Sales Inference- Gross Profit Ratio repeats the trend shown by operating ratio characterized by growth in the first half upto year 2008-09, after that a gradual decline in the gross profit margin due to the effect of global recession. A point worth to note is that, the performance of Ispat Industries had not been up to the mark throughout the concerned period and had also registered gross loss in the year 2005-06.

Net profit margin (%)

Years S. No. Companies Mar ' 07 Mar ' 08 Mar ' 09 Mar ' 10
(in %)

Mar ' 11

1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money

10.12 10.22 12.53 13.57 10.81 12.01

11.65 10.38 12.68 12.82 10.51 12.22

12.03 12.86 13.76 11.35 9.74 13.31

10.54 15.37 15.64 14.76 12.17 16.10

8.55 17.18 14.56 16.09 15.91 17.20

20 18 16 14 12 (in%) 10 8 6 4 2 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11 State Bank of India Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Net Profit Ratio This ratio explains the profit generating capacity of sales. The ratio is calculated by deducting non operating expenses from operating profit and adding non operating income to such profit.

Net Profit Ratio = Net Profit after Tax X 100 Net Sales

Inference- Net profit margin for majority of the companies had been satisfactory over the years fluctuating in the range of 15-25% of sales but for exception of Ispat Industries and Essar Steel who have depicted a very poor financial performance over these five years, were Ispat Industries also suffered net loss as much as three out of last five years. The reason could be these two firms being comparatively new in the business and yet to establish themselves, other reason being lower volumes of production resulting in diseconomies of scale.

Reported return on net worth (%)

Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money
(in %)

Mar ' 08 13.72 12.99

19.00

Mar ' 09 15.74 17.35

23.52

Mar ' 10 13.89 20.24

24.06

Mar ' 11 12.71 20.20

22.12

14.50 11.86
15.18

17.74 12.79 19.37

13.83 8.94 12.21

15.32 7.58 17.77

13.70 7.79 15.67

15.47 9.35 17.83

30 25 20 (in%) 15 10 5 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11

State Bank of India Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Return on Net Worth- It is calculated to assess the profitability of the firm from the shareholders point of view.

Return on Net Worth = Net Profit after Interest & Tax X 100 Shareholders Fund Inference- There is gradual reduction in the level of returns on net worth over the years for almost all seven companies. This implies low level of efficiency in earning returns on share holders funds. Especially the performance of Ispat Industries and Essar Steel is well below the mark, as they are not able to generate sufficient returns on shareholders funds in the last five years.

Return on long term funds (%)

Years

S. No.

Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank 99.20 81.71
80.76

(in %)

Mar ' 08 86.83 91.52

111.52

Mar ' 09 100.35 103.70

129.83

Mar ' 10 95.02 99.27

116.11

Mar ' 11 96.72 89.23

108.49

74.91 82.46 119.74

62.34 62.34 71.17

83.31 56.72 97.35

56.08 44.72 66.34

59.91 42.97 72.29

Source: Rediff Money

140 120 100 State Bank of India (in%) 80 60 40 20 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11 Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Return on Capital Employed (Long Term Funds)- This ratio is an indicator of the earning capacity of the capital employed in the business. It shows the percentage of return on the total capital employed in the business.

Return on Capital Employed = Operating Profit X 100 Capital Employed

Inference- Return on Capital Employed showed a positive growth trend in early years of the data period up to 2008-09, that was the time when the markets were hit by global recession. Thereafter, the ROC gradually declined and showed a trend for revival at the end of financial year 2009-10. Here there is a contrast performance exhibited by Tata Steel and Ispat Industries whose ROC had been constantly declining over the last five years. i. Leverage Ratios Leverage Ratios - In financial management, leverage refers to employment of funds to accelerate rate of return to owners. The leverage ratios explain the extent to which debt is employed in the capital structure of the concerns.

Debt/Equity Ratio
Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money

Rs. Crore Mar ' 08 10.96 13.77 15.44 8.76 5.27 9.99 Mar ' 09 12.81 14.99 15.96 9.75 4.42 11.49 Mar ' 10 12.19 15.96 15.36 7.78 3.91 8.81 Mar ' 11 14.37 14.55 15.62 8.22 4.10 9.96

13.91 14.44 13.79 10.62 9.50 17.28

20 18 16 14 Rs. Crores 12 10 8 6 4 2 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11 State Bank of India Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Debt Equity Ratio This ratio is calculated to measure the relative proportions of outsiders funds and shareholders funds invested in the company. This ratio is determined to ascertain soundness of long term financial policies of the company.

Debt Equity Ratio = Long Term Debts Shareholders Funds Ideal value 2:1 or 1:1 Inference- The Debt/Equity ratio had been quite low for majority of the companies over the years with exception of Ispat Industries which has very high proportion of debt in its capital structure. As extensive use of debt maximizes the returns on shareholders funds but it also entails risk of paying regular interests even in times of low surplus income.

Owners fund as % of total source/capital

Years

S. No.

Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank 6.70 6.47 6.76 8.60 9.52 5.47 Mar ' 08 8.36 6.77 6.08 10.24 15.95 9.09 Mar ' 09 7.24 6.25 5.89 9.30 18.46 8.00 Mar ' 10 7.57 5.89 6.11 11.39 20.35 10.19

(in %) Mar ' 11 6.50 6.43 6.01 10.84 19.62 9.12

Source: Rediff Money

25

20

15 (in%)

State Bank of India Bank of Baroda Punjab National Bank

10

HDFC Bank ICICI Bank

Axis Bank

0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11

Interpretation: Owners fund as % of total source/capital- It represents the contribution of shareholders or owners to the total capital employed by a firm. The ratio helps to understand the kind of capital structure a firm opts for, i.e. whether its equity or debt driven. Owners fund as % of total source = Shareholders Funds X 100 Total Capital Employed

Inference- Here companies like Tata Steel, SAIL and RINL have a very high proportion of owners fund in their capital structure; this means they are more equity driven. On the other hand, the comparatively smaller companies like Ispat Industries, Essar Steel, JSW and JSPL have a lower proportion (less than 50%) of owners funds in the total capital structure; this implies they are more debt driven in nature.

Fixed assets turnover ratio

Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank 5.44 4.25 5.48 4.33 4.52 4.97 Mar ' 08 6.32 3.47 4.35 5.18 5.61 6.32 Mar ' 09 7.20 4.20 5.64 5.00 5.14 7.78 Mar ' 10 7.26 4.48 5.89 4.24 4.60 7.31 Rs. Crore Mar ' 11 7.24 5.25 6.04 4.65 3.55 5.65

9 8 7 6 Rs. Crores 5 4 3 2 1 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11 State Bank of India Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Fixed Assets Turnover Ratio- This ratio measures the efficiency of the assets use. The ratio indicates how well the fixed assets are being used to generate sales in the business. Fixed Assets Turnover Ratio = Sales

Net Fixed Assets (Fixed Assets Depreciation) Inference- Fixed Assets Turnover ratio for all the firms had been satisfactory and has shown gradual improvements over the years. This implies enhanced efficiency in utilization of fixed assets to generate sales. This could be attributed to adoption of modern technology and practices in manufacturing and sales functions.

i.

Liquidity Ratios

Current ratio
Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money

Rs. Crore Mar ' 08 0.07 0.02 0.02 0.03 0.10 0.02 Mar ' 09 0.04 0.02 0.02 0.03 0.13 0.02 Mar ' 10 0.03 0.01 0.02 0.03 0.13 0.02 Mar ' 11 0.04 0.01 0.02 0.06 0.11 0.02

0.05 0.03 0.02 0.04 0.08 0.02

0.14 0.12 0.1 State Bank of India Rs. Crores 0.08 0.06 0.04 0.02 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11 Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Current ratio it is the ratio of current assets to current liabilities. It shows a firms ability to cover its current liabilities with its current assets. Current Ratio = Current Assets Current Liabilities Ideal value 2:1 or 2.0 Inference- The majority of the firms have maintained their Current Ratio in the ideal range of 2:1 to 1:1 for almost all five years. The exception is that of JSW whose Current Ratio levels are much below the ideal range. On the other hand, RINL has maintained a very high level of Current Ratio much above the ideal range for almost all the five years. This depicts the satisfactory position of the company to meet its short term liabilities with its sufficient current assets.

Quick ratio

Years

S. No.

Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank 6.52 11.29 11.10 4.07 6.04 7.39 Mar ' 08 6.15 9.56 9.40 4.89 6.42 9.23 Mar ' 09 5.74 9.62 9.75 5.23 5.94 9.52 Mar ' 10 9.07 21.88 20.47 7.14 14.70 19.19

Rs. Crore Mar ' 11 8.50 26.38 22.24 6.89 15.86 19.60

Source: Rediff Money

30 25 20 Rs. Crores 15 10 5 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11

State Bank of India Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Quick Ratio This is the ratio of liquid assets to current (liquid) liabilities. It shows a firms ability to meet current liabilities with its most liquid assets. Quick Ratio = Liquid Assets Current Liabilities Ideal value 1:1 or 1.0 Inference- Nearly all the firms except SAIL and RINL have maintained their Quick Ratio levels slightly below the ideal threshold value of 1:1 for almost all the past five years. The

Quick Ratio levels of SAIL and RINL are in the satisfactory range, while RINL has a Quick Ratio level way above the ideal mark which indicates its strong ability to meet current liabilities with its liquid assets.

Inventory turnover ratio

Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money

Rs. Crore Mar ' 08 Mar ' 09 Mar ' 10 Mar ' 11

i. Payout Ratios The amount of earnings paid out in dividends to shareholders and the amount of earnings retained for future growth and expansion out of total earnings constitute the payout ratios. Investors can use the payout ratio to determine what companies are doing with their earnings. Dividend payout ratio (net profit)

Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 18.98 24.59 30.71 Mar ' 08 22.64 23.75 23.40 Mar ' 09 22.90 17.22 23.86 Mar ' 10 23.36 20.90 20.74 (in %) Mar ' 11 26.03 17.76 18.27

4 HDFC Bank 5 ICICI Bank 6 Axis Bank

Source: Rediff Money

22.91 33.89 22.57

22.16 33.12 23.49

22.16 36.60 23.16

21.72 37.31 22.56

22.72 35.23 19.78

40 35 30 25 (in%) 20 15 10 5 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11 State Bank of India Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation: Dividend Payout Ratio This ratio indicates as to what proportion of earning per share has been used for paying dividend and what has been retained for ploughing back. Dividend Payout Ratio = Dividend per equity share X 100 Earning per share Inference- Dividend Payout Ratio is in general low, even less than 30% for all seven companies since last five years. These indicates the growth needs of the industries which requires ploughing back of profits for funding expansion projects, thus, reducing the percentage of dividends distributed out of total profits. Some companies like Ispat Industries, Essar Steel, RINL, etc. have not paid dividends for most of the last five years which indicates a greater focus on growth and expansion in future for these firms.

Earning retention ratio

Years S. No. Companies Mar ' 07 1 State Bank of India 2 Bank of Baroda 3 Punjab National Bank 4 HDFC Bank 5 ICICI Bank 6 Axis Bank
Source: Rediff Money

(in %) Mar ' 08 77.33 76.25 76.59 77.83 66.35 76.84 Mar ' 09 77.11 82.78 76.12 77.79 63.23 76.94 Mar ' 10 76.67 79.10 79.25 78.25 61.40 77.47 Mar ' 11 74.03 82.25 81.72 77.29 64.49 80.26

80.97 75.10 69.28 77.11 64.80 77.53

90 80 70 60 (in%) 50 40 30 20 10 0 Mar ' 07 Mar ' 08 Mar ' 09 Years Mar ' 10 Mar ' 11 State Bank of India Bank of Baroda Punjab National Bank HDFC Bank ICICI Bank Axis Bank

Interpretation:

Retained Earnings Ratio This ratio indicates the proportion of total earning which is not distributed as dividend and is retained within the organization for future growth and expansion purposes. Retained Earnings Ratio = Retained Earnings X 100 Total Earnings Inference- As it is evident from the above low Dividend Payout Ratio, all the major firms in the industries are saving their earnings for financing future expansion projects. This results in a overall high Earning Retention Ratio over last five years for all the seven major firms of the industry. The general Earning Retention Ratio is in the range of 60-100% for the industry over the last five years. i. Component Ratios

These ratios indicate the major portions or components of key financial parameters like sales, cost, profits, etc. Thus, these ratios help us to bifurcate and disintegrate a key parameter like sales into its major constituting elements like domestic and export sales, which leads to a better understanding of the said parameter viz. sales for the particular period.