Buy ICICI Bank; target of Rs 1050: Prabhudas Lilladher

Prabhudas Lilladher is bullish on ICICI Bank and has recommended buy rating on the stock with a target of Rs 1050 in its May 28, 2012 research report.

“Our analysis of ICICI Bank’s Annual report shows that operationally FY13 will be one of the strongest after FY08 (PPOP growth of +20%), with securitization- related losses peaking in FY11-12. In-line with the system, Infra growth has moderated significantly (<20% v/s ~60% in FY11) but a marginal red flag is ~27% growth in sectors (excl. Infra) facing some stress. At 1.4x FY13 book, market is completely disregarding ICICI’s recent corporate asset quality performance in a challenging environment and with operating performance expected to improve, we maintain our positive view.”

“Infra growth has moderated significantly to <20% from +60% over FY09-11 with similar growth in the power portfolio. Though underwriting in the corporate book has been robust as reflected in asset quality over the last 4-6 quarters, high growth in stress sectors (~30% in FY12) led by ~70% growth in the coal/mining portfolio is a concern. Credit derivative book continues to run down (US$200m from ~US$1.5bn in FY09), reducing potential risks. Losses on security receipts portfolio have peaked in FY12 (Rs4bn) and with no sale of NPAs over the last two years, we expect losses to come off substantially. Also, securitisation-related losses have come down to Rs2bn from Rs5bn in FY12 and we expect a complete rundown in FY13. Insurance-related fees have also bottomed out. Thus, despite muted loan growth assumptions, we expect ~22% PPOP growth in FY13, partly driven by significant reduction in recurring losses,” says Prabhudas Lilladher research report.   

Non-Institutions holding more than 90% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More