Buy ICICI Bank; target of Rs 462 : Prabhudas Lilladher

Prabhudas Lilladher's research report on ICICI Bank

ICICIBC’s PAT of Rs25.9bn (PLe: Rs31.9bn) saw a marginal miss on back much higher prudent COVID impact provisions of Rs55.0bn. Core PPOP grew by 15% YoY on back of strong 20% YoY NII growth & lower other opex offsetting a weak fee income. Slight disappointment was on NIMs which declined by 18bps QoQ to 3.69% owing to strong flow of deposits (21% YoY/4% QoQ was best amongst banks) creating large liquidity position. Moratorium book which has been focus point to track asset quality & collection was down to 17.5% of loans v/s 30% in Apr’20 end and has Rs83.0bn of COVID provisions or 1.42% of domestic loans.

Outlook
Strong liability base, strong capital levels (raising more equity ahead), steady asset quality with strong PCR of 78% remains a strong focal point, while real asset quality hits, if any, only will be visible from Sep’20 end. We retain BUY with revised TP of Rs462 (from Rs436) based on 1.8x FY22 ABV.

ICICI Bank 27072020-prabhu

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