Buy ICICI Bank; target of Rs 350: Axis Direct

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26 Aug, 2025 12:21

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Axis Direct's research report on ICICI Bank

ICICI Bank’s (ICICIBC) Q2 PAT at Rs 20.6 bn was below our estimate on lower-than-expected non-interest income and higher provisions. Slippages declined to Rs 46.7 bn (vs. ~Rs 50 bn in Q1), while the drill down list was down 3% QoQ to Rs 196 bn. ICICIBC has exposure worth Rs 119 bn (98.7% classified as NPA) to the 2nd list of cases referred to NCLT for resolution, while report on RBI’s inspection of its asset quality divergence is expected in Q3FY18 (key risk).

Outlook
We cut our FY18E/FY19E earnings by ~19% to factor in higher provisions, but derive comfort from reducing slippages, potential resolution of lumpy cases, improving growth and superior subsidiary valuations. However, we will be watchful of RBI divergence numbers and resolution of NCLT cases. The stock trades at 1.6x/1.4x FY18E/19E P/ABV (adjusted for cost and value of subsidiaries).
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