Dear All,
Forwarding you the Result Update on ICICI Bank for 4QFY2011 with a Buy Recommendation and a Target Price of Rs. 1426 (12 months).
4QFY2011 Result Update - ICICI Bank – Buy
For 4QFY2011, ICICI Bank’s standalone net profit grew by healthy 44.4% yoy to `1,452cr, below our estimates, mainly on account of treasury loss of `196cr. The key positive of the results was healthy growth in business with NIM improvement and continued reduction in NPA provisioning burden. We maintain our Buy recommendation on the stock.
Improvement in NIM and continuation of improvement in asset quality: During 4QFY2011, the bank’s advances increased by healthy 19.4% yoy while deposits grew by 11.7% yoy. CASA deposits showed healthy traction, growing at 20.8% yoy on the back of a 25.6% yoy increase in savings account deposits. CASA ratio improved further by 90bp qoq to 45.1%. Reported NIM improved by 10bp to 2.7% aided by fall in cost of deposits on a sequential basis. Employee expenses were on the higher side due to provision for bonus and higher headcount, leading to an increase in cost-to-income ratio to 44.5% from 42.3% in 3QFY2011. Gross NPAs declined by 1.5% qoq, while net NPAs continued to decline sharply (16.5% qoq). The provision coverage ratio (as per the RBI’s guidelines) improved further to 76.0% in 4QFY2011 from 71.8% in 3QFY2011.
Outlook and valuation: The bank’s strategies over the last 18 months have yielded a substantial improvement in the ratio of branches to net worth; this is expected to sustain a far more favourable deposit mix going forward. Moreover, a lower risk balance sheet is expected to drive down NPA provisioning costs, which we believe will enable RoE of 16.0% by FY2013E (with further upside from financial leverage). At the CMP, the bank’s core banking business (after adjusting `201/share towards value of the subsidiaries) is trading at 2.1x FY2013E ABV (including subsidiaries, the stock is trading at 2.0x FY2013E ABV). We value the bank’s subsidiaries at `201/share and the core bank at `1,225/share (2.8x FY2013E ABV). We maintain Buy on the stock with a Target Price of `1,426.
Kindly click on the below mentioned link to view the report.
If you have any further queries, feel free to call us on 022 39357600 Ext: 6864 ,6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,5th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600, Ext: 6864, 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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