Buy ICICI Bank; target of Rs 955: KR Choksey

KR Choksey's research report on ICICI Bank

Net interest income (NII) increased by 21% YoY to INR 1,26,046 Mn in Q4FY22 from INR 1,04,311 Mn in Q4FY21. The net interest margin was 4.0% in Q4FY22 vs 3.84% Q4FY21. NII for FY22 stood at INR 4,74,661 Mn, a growth of 22% YoY. Core operating profit (profit before provisions and tax, excluding treasury income) grew by 19% YoY in Q4FY22. However, the profit after tax (PAT) grew by 59% YoY to INR 70,187 Mn in Q4FY22 compared to INR 44,026 Mn in Q4FY21. For FY22, PAT stood at INR 2,33,395 Mn, an increase of 44% YoY. Provisions declined by 63% YoY to INR 10,690 Mn in Q4FY22 while for the full year FY22 it was reported at INR 86,414 Mn (down by 47% YoY). Gross NPA (GNPA) stood at 3.60% as on 31st March 2022 vs 4.13% as on 31st December 2021. Net NPA ratio (NNPA) declined from 0.84% as on 31st December 2021, to 0.76% as on 31st March 2022. The overall advances as on 31st March 2022 stood at INR 85,90,204 Mn, a growth of 17% YoY. Total deposits increased by 14% YoY and 5% sequentially to INR 1,06,45,716 Mn as on 31st March 2022.

Outlook

Since our last update, the shares of ICICIBC have corrected ~6%. We have applied a P/ABV multiple of 2.5x to the FY24E ABV of INR 319 per share, implying a SOTP valuation of INR 955 per share (unchanged). It has a potential upside of 27.0% at the CMP of INR 752 per share. As a result, we maintain our “BUY" rating on ICICI Bank's shares.