Buy ICICI Bank; target of Rs 387: Nalanda Securities

Nalanda Securities' research report on ICICI Bank

NIM came at 3.27% as compared to 3.19% in Q1FY19 and 3.2% in Q2FY18. NIM on domestic book improved from 3.54% to 3.57% sequentially, while NIM on overseas book reported significant improvement from 0.3% to 0.95% sequentially on the back of robust collection. Yield on advances came at 8.67% (v/s 8.71% QoQ, 8.68% YoY). Yield on funds came at 7.78% (v/s 7.69% QoQ, 7.83% YoY). Cost of funds augmented sequentially from 4,99% to 5.04% (v/s 5.10% YoY) due to rise in cost of deposits at 4,91% (v/s 4.81% QoQ, 4,98% YoY).

Outlook

PAT came at 909cr (v/s 2058cr in Q2FY18, loss of 120cr in Q1FY19). Return ratios came at 0.4% (RoA), 3.5% (RoE). We value stock at INR 387 (2x FY20 P/ABV of Bank + INR 120 of subsidiaries), assuming 20% holding discount, implying 23% upside from current levels.