FEDERAL BANK
RESEARCH REPORT
GROUP 7
SRISHTI RANJAN
AARNA TOMAR
DEV BHATI
DEV GULYANI
(DATE - 4/4/19)
INDEX
1. DESCRIPTION OF COMPANY
2. THE BOARD
3. PAST YEAR PERFORMANCE
4. ACCOUNTING ANALYSIS
5. SCOPE OF INDUSTRY
6. COMPARISON WITH COMPETING FIRMS
7. EQUITY PERFORMANCE
8. FINAL ANALYSIS
9. BIBLIOGRAPHY
FEDERAL BANK
DESCRIPTION OF COMPANY
TYPE PRIVATE
TRADED AS NSE: FEDERAL BANK
BSE: 500469
LSE: FEDS
INDUSTRY BANKING
FINANCIAL SERVICES
FOUNDED 23 April 1931 (as Travancore Federal Bank)
02 December 1949 (Federal Bank)
Federal Bank is a leading Private Sector, scheduled commercial bank in India,
headquartered in Aluva, Kochi with a history of 70 years and a large network of over
1251 branches and over 1665 ATMs and 258 cash recyclers spread across the
country. The Bank also has its Representative Offices abroad at Abu Dhabi and Dubai.
With a strong customer base of 8 million loyal customers, including 1.2 million NRI
customers and a large network of remittance partners across the world, Federal Bank
handles more than 15% of India’s inward remittances. The Bank has got remittance
arrangement with more than 110 Banks/Exchange Companies across the world. The
Bank is also listed in BSE, NSE and London Stock Exchange and has a branch in
India’s first International Financial Services Centre (IFSC) at GIFT City in Gujarat, which
is akin to a foreign branch of the Bank.
Federal Bank is transforming itself, keeping its principles intact, into an organization that
offers services beyond par. It has a well-defined vision for the future as a guidepost to
its progress. Federal Bank aims to be the ‘Most Admired Bank' which is Digitally
enabled with a sharp focus on Micro, Medium and Middle market enterprises.
THE BOARD
Name Designation
Mr. Dilip Gena Sadarangani Chairman
Mr. Shyam Srinivasan Managing Director & CEO
Mr. Nilesh Shivji Vikamsey Director
Smt. Grace Elizabeth Koshie Director
Smt. Shubhalakshmi Panse Director
Mr. C Balagopal Director
Mr. A P Hota Director
Mr. Balakrishnan Krishnamurthy Director
Mr. Ashutosh Khajuria Executive Director
PREVIOUS YEARS PERFORMANCE
Balance Sheet (in Rs. Cr)
Federal Bank
Balance Sheet ------------------- in Rs. Cr. -------------------
Mar '18 Mar '17
Capital and Liabilities:
Total Share Capital 394.43 344.81
Equity Share Capital 394.43 344.81
Reserves 11,810.80 8,592.56
Net Worth 12,205.23 8,937.37
Deposits 111,992.49 97,664.56
Borrowings 11,533.50 5,897.32
Total Debt 123,525.99 103,561.88
Other Liabilities & Provisions 2,577.73 2,472.67
Total Liabilities 138,308.95 114,971.92
Mar '18 Mar '17
Assets
Cash & Balances with RBI 5,132.76 4,576.57
Balance with Banks, Money at Call 4,070.65 2,875.61
Advances 91,957.47 73,336.27
Investments 30,781.07 28,196.09
Gross Block 448.08 474.54
Revaluation Reserves 5.01 5.01
Net Block 443.07 469.53
Capital Work In Progress 9.29 14.92
Other Assets 5,914.63 5,502.93
Total Assets 138,308.94 114,971.92
Contingent Liabilities 29,938.53 25,803.48
Book Value 62.21 51.89
Analysis
Total Income grew from ` 9759 Cr to ` 10912 Cr (up by 11.8%)
Net Interest Income grew from ` 3053 Cr to ` 3583 Cr (up by 17.4%)
Interest on investments grew from ` 1801 Cr to ` 1917 Cr (up by 6.4%)
Interest earned grew from ` 8677 Cr to ` 9753 Cr (up by 12.4%)
Cash Flow Statement (In Rs. Cr)
------------------- in Rs. Cr. --
Cash Flow
-----------------
Mar 18 Mar-17
12 mths 12 mths
Net
Profit/Loss
1,343.86 1,306.50
Before
Extraordinary
Items And Tax
Net CashFlow
From Operating -4,697.34 3,756.99
Activities
Net Cash Used
In Investing -1,576.61 -2,382.90
Activities
Net Cash Used
From Financing 8,025.03 658.71
Activities
Foreign
Exchange 0.15 -0.44
Gains / Losses
Net Inc/Dec In
Cash And
1,751.23 2,032.36
Cash
Equivalents
Cash And Cash
Equivalents 7,452.17 5,419.81
Begin of Year
Cash And Cash
Equivalents 9,203.41 7,452.17
End Of Year
Analysis
● Net Profit before tax and extraordinary items increased from
1306.50cr to 1343.86cr from 2017 to 2018.
● Net increase in cash and cash equivalents was much higher
in 2017(2,032.36) compared to 2017 (1,751.23)
● Cash and cash equivalents were also more in
2018(9,203.41cr) compared to 2017(7,452.17 cr)
PREVIOUS YEAR PERFORMANCE
(RATIO ANALYSIS)
RATIO FORMULA MAR 2018 MAR 2017
Net Profit Margin (Net Profit / Net Revenue) 9.01 9.57
(%)
Return on Total ( Net income / Average 0.75 0.84
Assets (%) total assets)
Earnings Per ( Profit After Tax/ no. of 4.62 4.83
Share(Rs.) Outstanding shares )
Book Value Per ( Total common Stock 61.28 51.37
Share (Rs.) holders equity/ number of
common shares)
Current Ratio Current Assets/Current 0.05 0.05
Liabilities
Return on Equity(%) (Net Income/Average 8.39 9.89
Shareholders Funds)
● The Net Profit margin of the company has decreased, it indicates the
effectiveness of the company in converting its revenue into sales. NPR of the firm
has decreased but still it shows the consistency in the firms performance.
● The return on total assets shows that how much the assets of the Company are
efficient in generating the revenue. The ratio have decreased marginally in past 2
years (i.e. from 0.84 to 0.75 ) showing that assets of the Company are being
utilized with greater efficiency in the last year.
● Return on Equity ratio inform the investors how efficient the company is turning
their equity investments into profits. The ROE ratio of the Company is quite good
reflecting that there is a strong return on the equity investments but it has
decreased from previous year.
● Current Ratio measures company's ability to meet its liabilities over a specified
period of time. The company’s current ratio of 0.05:1 is very much less than the
ideal ratio of 2:1. There is a need for the company to improve this ratio, so that it
is able to meet any uncertain short term liabilities that may occur .
● The Earning Per Share shows the portion of company’s profit allocated to each
share. EPS of the Company has decreased showing lesser profitability for the
firm and lesser return for the shareholders.
SCOPE OF INDUSTRY
(Banking Sector)
The Indian banking system consists of 27 public sector banks, 21 private sector banks, 49 foreign banks,
56 regional rural banks, 1,562 urban cooperative banks and 94,384 rural cooperative banks, in addition to
cooperative credit institutions. In FY07-18, total lending increased at a CAGR of 10.94 per cent and total
deposits increased at a CAGR of 11.66 per cent. India’s retail credit market is the fourth largest in the
emerging countries. It increased to US$ 281 billion on December 2017 from US$ 181 billion on December
2014.
COMPARISON WITH COMPETING FIRMS
Name Last Market Cap. Net Interest Net Profit Total Assets
Price
(Rs. cr.) Income
HDFC Bank 2,297.25 6,25,611.61 80,241.35 17,486.75 10,63,934.31
Kotak Mahindra 1,334.25 2,54,669.03 19,748.49 4,084.30 2,64,933.40
ICICI Bank 392.15 2,52,789.03 54,965.89 6,777.42 8,79,189.16
Axis Bank 765.65 1,96,897.99 45,780.31 275.68 6,91,329.57
IndusInd Bank 1,757.95 1,05,949.34 17,280.75 3,605.99 2,21,626.17
Bandhan Bank 549.5 65,559.90 4,802.30 1,345.56 44,310.07
Yes Bank 269.1 62,297.54 20,267.42 4,224.56 3,12,445.60
RBL Bank 652.95 27,862.01 4,507.57 635.09 61,850.75
IDFC First Bank 54.35 25,988.41 8,930.00 859.3 1,26,520.18
ING Vysya Bank 1,027.00 19,719.13 5,205.22 657.85 60,413.23
Federal Bank 96.15 19,086.26 9,752.86 878.85 1,38,313.95
City Union Bank 198.9 14,609.22 3,402.42 592 39,937.26
DCB Bank 199.5 6,175.46 2,412.99 245.34 30,222.09
Federal Bank ranks 11th in terms of market capitalization in Indian Banking industry. Shows it has a
good financial strengths as compared to some of its competitors
NPA ISSUE
IT HAS LESSER NPA IN 2017 AS COMPARED TO OTHER BANKS.
EQUITY PERFORMANCE
The company has delivered a poor growth of 9.60%
over past five years. Company has a low returnon equity of 8.10%
for last 3 years.
CURRENT PRICE
The current price of each share as on 4 April 2019 , is 96.30 INR.
FINAL ANALYSIS
● The company has delivered a poor growth of 9.60%
over past five years. Company has a low returnon equity of 8.10%
for last 3 years.
● Dividend given by the company is about 1 INR per share, which has
increased from last year 0.90 INR per share ,Hence it is definitely a
growth stock.
Looking at its 2 year’s performance and baking sector industry, the share is still a cheap
share with low returns as compared to its peers
BIBLIOGRAPHY
1. https://economictimes.indiatimes.com/hdfc-life-insurance-company-
ltd/stocks/companyid-3068.cms#charts
2. https://www.value.today/india/insurance
3. https://www.moneycontrol.com/
4. https://www.bseindia.com/investor.html
5. https://www.nseindia.com/products/content/equities/ipos/homepage_i
po.htm
6. http://www.irdaonline.org/https://www.investopedia.com/
