FINANCIAL RATIO ANALYSIS OF HDFC BANK

Roll No 09 Name Meghana Damaraju

10
11 12

Manaswi Deshmukh
Visishtha Devulapalli Nikita Dhadda

HDFC
The Housing Development Finance Corporation Limited (HDFC) 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
HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. The HDFC Group holds 23.15% of the Bank's equity and about 17.29 % of the equity is held by the ADS / GDR Depositories (in respect of the bank's American Depository Shares (ADS) and Global Depository Receipts (GDR) Issues). 30.68 % of the equity is held by Foreign Institutional Investors (FIIs) and the Bank has 4,47,924 shareholders. Largest bank by market capitalization

Market Price Market Cap

- NSE : 519.85(as on 31/03/12) - Rs. 139552.66

Market price as on 10.9.12- 591.05

SR. NO
1.

RATIOS

2012 2011

ANALYSIS

Price/Earnings Ratio
Market Price per share Net income per share

76.79% 81.59% The Ratio is decreased from 2011

to 2012 considerably. The difference is mainly because of substantial decrease in Market Price.

2.

Return on Assets
Net Income + Interest (1 Tax Rate) Total Assets

0.79%

0.79%

ROA is almost same

3.

Return on Invested Capital

Net Income + Interest (1 Tax Rate) Long-term liabilities + Shareholders equity

1.36%

1.31%

ROIC is increased from 2011 to 2012 in a small amount. The difference is mainly because of variation in Net Income along with small diff in LT Liability & Shareholder's Fund

SR. NO
4.

RATIOS
Return on Shareholders Equity
Net income Shareholder s Equity

201 2
4.90%

2011 ANALYSIS
4.67%
The Ratio is increased from 2011 to 2012. The difference is mainly because of variation in Net Income along with small diff in Shareholder's Fund
between the two years, since both the revenue from sales and sales expenses have increased.

5.

Gross Margin Percentage 98.40% 98.22% There is not much difference

Gross Margin Net Sales Revenue

6.

Profit Margin
Net income Net Sales Revenue

64.63% 64.47%

The Ratio has increased from 2011 to 2012. The difference is mainly because of variation in Net Income.

SR. NO
7.

RATIOS
Asset turnover
Sales Revenue Total Assets

2012 2011
0.028 Times 0.026 Times

ANALYSIS
The Ratio is increased slightly from 2011 to 2012. With almost the same TA, the company is able to produce more Sales Revenue. This ratio has slightly decreased from 2011 to 2012. Since the capital has increased slightly more than sales, this ratio has decreased. This ratio is almost same for both the year.

8.

Invested capital turnover

Sales Revenue Long-term liabilities + Shareholders eq.

0.036 Times

0.042 Times

9.

Equity turnover Sales Revenue Shareholders equity

0.24 Times

0.21 Times

SR. NO.
10.

RATIOS
Capital intensity
Sales Revenue Property, Plant and Equipment

2012
21.09 Times

2011
16.33 Times

ANALYSIS
Ratio has increased from 2011 to 2012 slightly. The utilization of Fixed Assets like Properties, Plants & Equipments for generating Sales is comparatively higher in 2012. Ratio is reduced considerably due to a huge decrease in the Cash & Bank Balances which is used for paying out debts & purchase of assets.

11.

Days cash
Cash Cash Expenses 365

5860.7 days

9254.55 days

12.

Days receivable
Accounts Receivable Sales 365

3.85 days

4.38 days

This ratio has reduced slightly from 2011 to 2012.

SR. NO
13.

RATIOS
Cash flow/ Debt Cash generated in operations Debt Working capital turnover
Sales Revenue Working Capital

2012
3.19%

2011
2.9%

ANALYSIS
The ratio increased slightly from 2011 to 2012. The difference is mainly because of increase in cash and decrease in debt. The Ratio is increased from 2011 to 2012 slightly. The negative working capital is an evidence of the constant cash transactions in banks

14

-0.10 Times

-0.12 Times

SR. NO
15.

RATIOS
Current ratio
Current Assets Current Liabilities

2012 2011
0.35 0.44

ANALYSIS
This ratio is almost same for both the year.

16.

Acid test ratio

Current Assets Inventories Current Liabilities

0.35

0.44

The Ratio is reduced from 2011 to 2012 considerably. The difference is mainly because of huge reduction in Cash Asset (Monetary CA). Ratio is increased from 2011 to 2012 slightly. This is due to increased Shareholder's Fund whereas Total Assets remains relatively same.

17.

Financial leverage ratio

Assets Shareholders Equity

8.54

8.24

SR. NO
18.

RATIOS

2012 2011

ANALYSIS

Debt/Equity Ratio
Total Liabilities Shareholders Equity

8.54

3.96

The Ratio is increased from 2011 to 2012 moderately, Ideally it should be as low as possible. The difference is due to increase in Long-Term Liabilities This ratio is almost same for both the year. The Ratio is reduced from 2011 to 2012 considerably. The difference is mainly because of huge increase in Interest Expense

19.

Debt/Capitalization Long term Liabilities Long term liabs + Shareholders equity Times Interest Earned
Pretax operating profit + Interest Interest

41.6% 79.83%

20.

0.41

0.47

The Ratio is reduced from 2011 to 2012 considerably. The difference is mainly because of huge increase in Interest Expense