Accumulate ICICI Bank; target of Rs 467: Arihant Capital
Arihant Capital recommended accumulate rating on ICICI Bank with a target price of Rs 467 in its research report dated November 02, 2020.
November 09, 2020 / 03:15 PM IST
Arihant Capital 's research report on ICICI Bank
ICICI Bank has reported stable performance during Q2FY21, the sharp 61% QoQ decline in provisions, led to a sharp jump in PAT at Rs 4,251 cr (+64% QoQ). NII for the quarter grew by 16% YoY/1% QoQ to Rs 9,366 cr, driven by loan growth of 6% YoY. PPOP increased by 20% YoY to Rs 8,261 cr, due to strong NII growth and decline in OPEX (-5% YoY). Other income for the quarter declined by 4% YoY to Rs 4,028 cr, supported by treasury gains of Rs 542 cr (including Rs 305 cr from stake sale in ICICI Securities). On the other hand, fee income picked up strongly by 49% QoQ. The bank continues to take precautionary Covid-19 provisions of Rs 479 Cr during Q2FY21 (total Covid provision at Rs 8,772 Cr as on H1FY21 - 1.3% of loans). Provision coverage of the bank strengthened further to ~82% from 79% QoQ.
We assign a P/adj. BV multiple of 2x on FY22E adj. BV of INR 179 for standalone bank and use a SOTP approach to value its subsidiaries, arriving at a fair value of INR 467 (INR 425 earlier). We maintain our Accumulate rating on the stock.
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