Accumulate ICICI Bank; target of Rs 1593: Deven Choksey

Deven Choksey's research report on ICICI Bank

Net Interest Income (NII) grew 7.4% YoY to INR 2,15,295 mn, reflecting steady loan growth and a healthy funding mix, though sequentially it declined 1.9% QoQ due to margin compression. Net Interest Margin (NIM) moderated to 4.30%, down 4bps QoQ and +3bps YoY. NII came in below estimates due to lower-than-expected NIM (4.30% vs est. 4.34%). Deposits expanded 7.7% YoY and remained stable sequentially (+0.3% QoQ) at INR 16.1 tn. CASA deposits rose 8.2% YoY and 12.9% QoQ, improving the CASA ratio by 457bps QoQ to 40.8%, signaling regained momentum in low-cost deposit mobilization. Advances stood at INR 14.1 tn, up 10.3% YoY and 3.2% QoQ, supported by healthy retail and SME traction. Net domestic advances grew 10.6% YooY and 3.3% sequentially. The retail loan portfolio rose 6.6% YoY and 2.6% QoQ, accounting for 52.1% of the total loan portfolio. The business banking portfolio expanded 24.8% YoY and 6.5% sequentially, while the rural portfolio declined 1.3% YoY but grew 0.8% QoQ. Domestic corporate loans increased 3.5% YoY and 1.0% sequentially. Overall, total advances rose 10.3% YoY and 3.2% QoQ to INR 14,08,456 crore

Outlook

We value ICICI Bank’s standalone business at INR 1,394 and its subsidiaries at INR 199, giving a SOTP target of INR 1,593/share. With 14.6% upside, we downgrade our rating from “BUY” to “ACCUMULATE.”