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ICICI Bank Ltd Research Report - 21st Jan 2016

Banking | Published on Nov 03rd 2015


ICICI Bank reported a decent set of number for 2QFY2016, with PAT growth of 11.9% yoy to Rs3,030cr (in-line with our expectation). Healthy growth in retail advances During 2QFY2016, the bank’s advances grew by 13.3% yoy (2.5% qoq), aided by healthy retail loan book growth of 25.2% yoy. The main drivers leading to the growth in the retail loan book were Personal loans and Home loans, which grew by 56% and 25% yoy respectively. Retail contribution to total loans increased to 44.0% as compared to 39.8% in the corresponding quarter of the previous year. The corporate book grew 7.2% yoy. Advances were made mainly towards working capital requirements while some of the incremental lending was done to PSU companies and other better rated companies. Deposits growth was modest at 9.2% yoy, while CASA deposits saw a moderate growth of 12.9% yoy, resulting in improvement in CASA ratio by 144bp yoy to 45.1%. The Reported NIM fell by 2bp qoq to 3.52%, with domestic NIM at 3.84% as compared to 3.90% in 1QFY2016. The non-interest income (excluding treasury) for the bank grew 7.1% yoy. On the asset quality front, the bank witnessed slippages during the quarter to the tune of Rs2,242cr (annualized slippage ratio at 2.3%) as compared to Rs1,672cr in the sequential previous quarter (annualized slippage ratio at 1.73%), with slippage from restructuring at Rs931cr. The Gross NPA ratio increased 9bp sequentially to 3.77%, whereas the Net NPA rose 7bp qoq to1.65%. The bank refinanced ~Rs2,000cr under the 5:25 scheme. The Management has guided for lower addition to NPA and restructuring in FY2016 as against FY2015. Outlook and valuation: At the current market price, the bank’s core banking business (after adjusting Rs58/share towards value of subsidiaries) is trading at 1.5x FY2017E ABV. The valuation discount in our view vis-à-vis other private banks adequately factors in the relatively higher stressed assets in the bank’s books. We recommend a Buy rating on the stock, with a target price of Rs348.

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CMP 279
Target Price 348
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)161,596.57
MCAP NSE (Rs in Cr)161,421.99
P/E (x)14.82
EPS (Rs.)18.74
BV (Rs.)153.16
Div Yield (%)1.80
FV (Rs.)2.00
P/BV (x)1.81
EV/Sales (x)12.95
EV/EBITDA (x)109.04

Shareholding Pattern (%)

Public & Others-18.0
Grand Total100.0

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