Buy ICICI Bank; target of Rs 1079: KRChoksey

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Buy ICICI Bank; target of Rs 1079: KRChoksey

KRChoksey is bullish on ICICI Bank and has recommended buy rating on the stock with a target of Rs 1079 in its February 1, 2012 research report.

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KRChoksey is bullish on ICICI Bank and has recommended buy rating on the stock with a target of Rs 1079 in its February 1, 2012 research report.

"ICICI Bank reported excellent performance with PAT of Rs1,728 crore up 20.3% y-oy and 15.0% q-o-q, ahead of our expectation. Net interest income grew modestly 17.3% y-o-y & 8.2% q-o-q aided by steady loan growth 19.1% y-o-y and 9bps q-o-q improvement in NIMs. Fee income continued to be tepid at 4.7% y-o-y and flat q-o-q due to lower fee in large ticket corporate segment (M&A, syndication & international banking) which was partially offset by good traction in granular fee income streams. Non interest was also boosted on of account maiden dividend Rs150 crore (7.9% of non interest income) from ICICI Pru life during the quarter. Cost to income ratio has declined 293bps q-o-q to 41.6%. Broadly, asset quality trends have been showing continuous improvement both at delinquency and recovery level. Provisions increased only 7.0% q-o-q in line with asset quality trends and asset growth. Life and general insurance performance were steady with PAT of Rs367crore and Rs101 crore respectively. Consolidated PAT grew strongly 6.6% y-o-y & 30.4% q-o-q."

"Net Interest income grew 17.3% y-o-y supported by steady loan growth (19.1% y-o-y) and 9bps q-o-q improvement in NIMs. Overseas margins increased 31bps to 1.40% vs. 1.09% in Q2FY12. Domestic NIM stood at 2.98%, up 6bps q-oq. We expect blended NIM is likely to stable ~ 2.7% on the back of improvement in overseas NIM and upward bias in domestic NIMs. The management expects blended NIMs to improve on the back of higher share domestic loan book growth and better asset yields. Gross NPA stood at 3.82%, decline of 32bps on q-o-q basis. However, Net NPAs declined by 10bps q-o-q to 0.83%. Provision coverage ratio stands at 78.9%, an increase of ~73bps on sequential basis. Provisions increased only 7.0% q-o-q driven by improvement in overall asset quality. The bank has restructured loans amounting to Rs880 crore (0.36% of advances) against Rs750 crore loan restructuring in Q2FY12.Net restructured loans for the quarter stands at Rs 3070 cr (1.2% of advances) lower than peer group banks."

"ICICI Bank delivered strong core operating performance and performed well on most of operating parameters in tough quarter.. Healthy NII growth, strong loan growth, improving operating efficiency, marked improvement in asset quality and stable provisions were key drivers for earning growth. Focus on profitable growth, improving liability franchise, better branch productivity, improving asset quality emerged key value drivers for the stock. We have revised upward FY12 & FY13 earnings estimate by 2.2% & 3.5% respectively factoring in healthy overseas NIMs and lower credit costs. At Rs 909, the stock is trading at 15x FY13 earnings and 1.2x FY13 core book, favorable risk reward in our view. We reiterate our BUY rating on the stock with target price of Rs 1079," says KRChoksey research report.   

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To read the full report click on the attachment