Motilal Oswal is bullish on ICICI Bank has recommended buy rating on the stock with a target price of Rs 470 in its research report dated May 06, 2019.
Motilal Oswal's research report on ICICI Bank
ICICIBC reported PAT of INR9.7b (significantly below our estimate) in 4QFY19, mainly due to higher provisions of INR54.5b (our estimate: INR33.9b). For FY19, NII grew 17%, while PAT declined 50% YoY to INR33.6b owing to higher provisions (credit cost of ~3.6%). NII increased 26.5% YoY to INR76.2b in the quarter, led by a 32bp QoQ improvement in the margin to 3.72%. The NIM was driven by a one-off impact of (a) 20bp on account of income tax refund (INR4.1b) and (b) 5bp due to interest collection from NPLs. On a like-to-like basis, the margin improved 25bp QoQ. Core fee income grew ~15% YoY, with retail forming 74% of total fees. Advances rose 14.5% YoY, with domestic book growing by 17% YoY (~22% YoY growth in retail), while the overseas loan mix declined to 10.7%. Deposit growth was healthy at 16.4% YoY. CASA ratio stood at 49.6% v/s 49.3% in 3QFY19, while the average CASA mix stood at 44.6% v/s 46% in 3QFY19 and 45.9% in 4QFY18.
We fine tune our FY20/21 earnings estimates and expect ~1.5% RoA by FY21. We maintain our SOTP-based PT of INR470 (2.0x FY21E ABV).
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