Bull vs Bear: Will ICICI shares out or underperform ahead?

In an interview with CNBC-TV18, independent market expert Ambareesh Baliga and Gaurang Shah, VP, Geojit BNP Paribas Financial Services, talked about their outlook on ICICI Bank, which reported weak quarterly numbers on Friday.Below is the transcript of Gaurang Shah and Ambareesh Baliga’s interview with Anuj Singhal and Ekta Batra on CNBC-TV18.Anuj: It has underperformed quite a bit if you compare last week and today. Still you are a bear?A: Yes, I am still a bear at least for a while longer, at least for the next couple of quarter, we still do not know whether it is the end of the provisioning or there could be some more skeletons coming out. Now although that could be much lower than what we have seen in the recent past, but we should remember that all through the last decade, ICICI Bank was getting that premium valuation basically because the way they had got aggressively expanding. Now, after getting into this sticky situation, the growth going ahead will really get moderated and that will also mean that you really may not get that premium valuation which you were getting in the past, because of which I think this could remain an underperformer at least for a while. And the way I look at it, possibly, we could see levels which we have touched recently, that is about Rs 180-181. That is a level which is possible.Ekta: What is your thesis on ICICI Bank?A: The major negativity was on fall back of that Rs 3,600 crore exceptional provisioning that the bank did. And of course, we had the conference call and of course, the views from the management after the numbers. The sense over here is that a large part of the negativity in terms of earnings which we have seen up till now and looking at the next two or three quarters, our sense is given the kind of the state of affairs and the disclosure that the bank has given should be limited from here on, the downside I am talking about. We also believe that there is going to be a case wherein because of the initiatives and steps that the government has taken, there could be a change for turnaround for good in terms of loan book growth and as well for the recoveries which have been already provided for. Not to forget, it is one of the largest banks with 4,000 plus branches, ATMs and all products in terms of financial or banking services under one umbrella. We are maintaining a positive stance not ruling out a further downside.Now, I will tell you one more thing. There could be a further downside even more given the fact that there could be a tactical shift from people who are already invested in ICICI Bank and who are not waiting to see those recoveries for the next two or three quarters and move into other private sector banks, case-in-point Axis Bank or Kotak Bank or HDFC Bank which could lead to a pressure again over here. So, those people who are waiting to look at the next two or three quarters with patience in terms of recovery we are advising a buy with the downside being protected of course, and if you are a little bit of a risk averse and low risk appetite, then a phased out buying should be initiated from current levels.