Buy ICICI Bank; target of Rs 350: Axis Direct

Axis Direct's research report on ICICI Bank

ICICI Bank reported a soft Q1 with an in-line PAT (Rs 20.5 bn – down 8% YoY), subdued advances growth (3% YoY) and 30 bps QoQ margin drop (NIM included 10 bps benefit from income tax refunds). However, the focus seems to be largely on the clean-up activity resulting in stable headline asset quality (GNPA ratio up 10 bps QoQ at 8.8%) and de-growth in corporate and overseas loan book. Bank proactively provided additional provisions of Rs 1.6 bn on stressed sectors such as telecom, power, iron & steel etc.

Outlook

Watch-list increased from Rs 190 bn in Q4 to Rs 204 bn. On 12 a/c's referred to IBC, it has exposure of Rs 69 bn with 41% provisions. It is required to provide Rs 6.5 bn more over 9 months to meet 50% coverage requirement (can increase with failed resolutions).