Motilal Oswal is bullish on ICICI Bank has recommended buy rating on the stock with a target price of Rs 520 in its research report dated July 27, 2019.
Motilal Oswal's research report on ICICI Bank
ICICIBC's 1QFY20 PAT of INR19.1b (est. of INR21.2b), was led by strong NII and controlled opex. Core PPoP grew a healthy 21% YoY (in-line). NII grew 27% YoY to INR77.3b, led by healthy loan growth with additional boost from interest on IT refunds. NIMs stood at 3.62% v/s 3.72% in 4QFY19 including 9bp impact on IT refund (INR1.8b) and 8bp impact due to interest collection from NPLs. On a like-to-like basis, margins moderated marginally by 3bp QoQ. Other income declined 11% YoY as 1QFY19 had stake sale gain from IPRU while core fee income grew ~10% YoY (retail forms 72% of total fees). Total income, thus, was up 12% YoY to INR111.6b (in-line). Opex grew 18% YoY due to higher employee expense growth of 29% YoY (due to higher retirement led provisions). Advances grew 15% YoY with domestic book growing 18% YoY (~22% YoY growth in retail), while overseas loan mix declined further to 10.1%. Deposit growth stood healthy at 20.8% YoY. Term deposits grew 34% YoY, resulting in moderation in average CASA mix to 43.4% v/s 44.6% in 4QFY19.
We expect the bank to deliver loan CAGR of 17% over FY19-21E, and estimate core RoA/RoE to improve to 1.5%/15.5%. Maintain Buy with a revised SOTP-based TP of INR520 (2.2x FY21E ABV for the bank). ICICI remains our top pick in the sector.
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