Fundamental

ICICI Bank Ltd. Initiating Coverage



ICICI Bank’s performance goes strength to strength with each passing quarter as the bank emerges out of NPA mess and top management debacle. The bank’s brand name is most common among high quality customer servicing private sector bank in households and is gradually shifting the bulk of credit book focussed on retailers. The bank’s management has clearly noted the aggressive corporate loan disbursements in the past which led to the worsening of assets and has checked on the growth of corporate loan book with preference for the higher rated credit line applications (visible from the loan book mix over last couple of years). The recently announced capital infusion of INR 20,000 Cr will help bring in more liquidity with the bank to compete with its peers (especially the likes of HDFC Bank, Axis Bank and SBI). Viewing the potential of further increase in market share in the retail lending business, and expansion of touchpoints bringing in more new customer accounts, we are initiating coverage on ICICI Bank with a BUY recommendation.

 

Valuation & View: ICICI bank is poised to compete aggressively with other peers who have made significant inroads into retail lending, in which several banks are competing to provide credit cards, personal loans and home loans for higher spreads. The bank’s vast branch chain of 5,228 branches across the nation and formidable customer services along with the new management focusing on changing the business mix rapidly, the bank will regain the past glory. The bank’s insurance subsidiaries are performing at unprecedented levels, securities and AMC subsidiaries are yielding stable profits and overseas banking subsidiaries growing moderately. ICICI Bank is currently trading at a 2.8 x P/adj. BV FY21E. Furthermore, the addition of the bank’s scrip in MSCI indices and the equity infusion of INR 20,000 Cr will make the bank attractive for FIIs/DIIs. We assign a P/adj. BV multiple of 2.6x on adj. BV of INR 179 for standalone bank and use a SOTP approach to value its subsidiaries, we arrive at a Target Price of INR 618


Tags: Daily


Search Reports

SEARCH

Reports

Daily Market Update...

Nifty opened higher traded...

Read More

Daily Market Update...

Nifty opened positive but...

Read More

Daily Market Update...

Nifty opened down and traded...

Read More

Daily Market Update...

Nifty opened positive but...

Read More

Daily Market Update...

Nifty opened down and traded...

Read More

Axis Bank Ltd Q3FY20 -...

Axis Bank Q3FY20 earnings...

Read More

LTTS

SHORT TERM TRADING CALL: BUY...

Read More

ICICI PRUDENTIAL

SHORT TERM TRADING CALL: BUY...

Read More

HDFC Bank Ltd. Q3FY20 -...

HDFC Bank’s performance...

Read More

Tata Consultancy...

TCS came out with reasonable...

Read More

Subscribe to newsletter

Request a call back

DISCLAIMER: Investment in markets is subject to market risk, the views and investment tips expressed by our research entity on arihantcapital.com are product of their own. Whilst meticulous care has been taken to ensure that the facts stated are accurate and opinions given are fair and reasonable, neither the analyst nor any employee of our company is in any way is responsible for its contents and nor is its accuracy or completeness guaranteed. ArihantCapital.com offers the views and opinions for assistance only and these are not intended and must not be alone taken as the basis for an investment decision. We advise the users to check with certified experts before taking any investment decisions. The investments discussed in this material may not be suitable for all investors. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material.