Jul 19, 2011, 07.13 PM | Source: CNBC-TV18
Credit Suisse has recently downgraded ICICI Bankís stock to neutral from outperform, with a target price of Rs 1066, cutting their FY13 earnings forecast by 10%.
Their key concern has been the growth of ICICIís corporate book. Over the last few years, ICICI has been transforming into a corporate lender versus being primarily a retail lender. Currently, over 80% of their total credit exposure is in the corporate segment versus 60% in March of 2008. In FY11, ICICIís corporate loan book grew a staggering 41% versus 8% for non-corporate loans.
Another key concern is the growth of the bankís commercial real estate loans, standing at 86% year on year, is the highest in the banking sector. Currently, real estate loansí share is 12% of their total loan book and 46% of their net worth. Also, loans to the power sector are up by 69%, constituting 34% of their net worth.
Due to the perceived problems, Suisse has cut their FY12 expected EPS by 7%, net interest margins by 5 basis points (2.7% in FY11) and increased their credit cost assumptions by 5 basis points.
Therefore, Credit Suisse has pegged ICICI Bank core bank valuations at two times book value.
For full details, watch the accompanying video.
India's largest private sector life insurer ICICI
ICICI Bank said customers of any bank who have cre
Ashwani Gujral of ashwanigujral.com feels that ICI
Prakash Gaba of prakashgaba.com is of the view tha
Ashwani Gujral of ashwanigujral.com is of the view