Buy ICICI Bank; target of Rs 470: Dolat Capital

Dolat Capital's research report on ICICI Bank

ICICI bank’s annual report highlights strengthening of digital capabilities and cross functional collaboration, reiterating management’s long-term strategic focus of growing in a risk calibrated and granular manner. Other key takeaways include: decline in share of unsecured loans despite a high growth in PL/CC book, reduced concentration in deposits and advances, rise in core PPoP/assets, and improving cost efficiencies. Corporate segment turned profitable in FY20 after making loss over the four years, led by decline in provisions. Provisions in the retail segment saw a sharp rise. Rise in contingent liabilities during FY20 mainly pertain to increased derivative transactions led by market making activities, with limited credit risk. In the international book, the Bank aims to progressively exit exposures that are not linked to India in a planned manner. NPAs particularly increased in the CRE, trade and CV portfolios in FY20.

Outlook

We maintain our BUY recommendation on the stock with an unrevised SOTP-based Target Price of Rs470, valuing the standalone bank at 1.7x FY22E book, which including the value of subsidiaries implies 2.4x of FY22 P/ABV.

ICICI Bank 25072020-dolat

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