Sharekhan`s research report on ICICI Bank“With an improvement in the liability profile, ICICI Bank is better positioned to expand its market share especially in the retail segment. We expect its advances to grow at ~19% compound annual growth rate (CAGR) over FY2014- 16 leading to a CAGR of 17.0% in the net interest income.” “ICICI Bank’s asset quality has stabilised and fresh non-performing asset (NPA) additions are within manageable limits. We believe the strong operating profits should help the bank to absorb the stress which anyway is expected to recede due to an uptick in the economy. Led by a pick-up in the advance growth and a significant improvement in the margin, the RoE is likely to expand to ~16% by FY2016 while the return on assets (RoA) is likely to improve to 1.8%. This would be driven by a 15.3% growth (CAGR) in the profit over FY2014-16. The stock trades at 2.1x FY2016E BV. Moreover, given the improvement in the profitability led by lower NPA provisions, a healthy growth in the core income and improved operating metrics, we recommend a Buy with a price target of Rs1,723,” says Sharekhan research report.
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