Buy ICICI Bank; target of Rs 395: KRChoksey

KRChoksey's research report on ICICI Bank
ICICI Bank continued to post a weak quarter with advances growth of 3.3% yoy and PAT de-growth of 8.2% yoy along with gross NPAs expanding by 10 bps qoq to 7.99% (net NPAs at 4.86% vs. 4.89% for Q4FY17). Total interest income for the quarter came in at Rs. 134591 mn, up 1% yoy, down -0.8% qoq on back of muted advances growth and contraction in yields which declined 19 bps qoq and 40 bps yoy. Slight expansion in NIM, of 6 bps on yoy basis (helped by improved deposits mix), has helped NII expand by 8.4% on yoy (but down 6.2% qoq). Non-interest income during the quarter was Rs. 33879 mn mostly driven by fee and treasury income growth of 10.3% and 11.7% respectively.

Outlook

We therefore value the bank at 1.9x FY19E ABVPS and we value the subsidiaries at Rs. 97 per share, thus arriving at a SOTP value of Rs. 395 per share, which offers an upside of 34% from current levels. We maintain our rating at BUY

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