Buy ICICI Bank; target of Rs 285:Axis securities

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Axis securities's research report on ICICI BankICICI Bank reported a disappointing quarter with sharp deterioration in asset quality. The increase in NPLs was largely on account of asset re-classification as per RBI’s assessment. Out of the humongous slippages of Rs 65.4 bn (7.0% of advances vs. 2.5% in Q2FY16), over 60% stemmed due to re-classification. Management guided for a similar amount of slippages in Q4FY16, which will keep the credit cost at much higher level (our estimate: 180 bps for FY16E). Despite weakening asset quality leading to higher provisions, ICICIBC reported an in-line PAT of Rs 30.2 bn (up 4% YoY) supported by one-off gain of Rs 12.4 bn (4% stake sale in ICICI Pru Life). The bank expects to sell further stake in its life (2%) and general insurance (9%) business after regulatory approvals, thereby supporting the PAT in Q4.We have factored in the recent (4% in life insurance)and proposed (2% in life and 9% in general) stake sale in its insurance subsidiaries in FY16 estimates. Inflow of gain from sale of stake helps in neutralizing the impact of higher credit costs and the bottom line estimates remain intact despite significant slippages and provisioning. We believe the stock will languish at current levels in the near term till the asset quality or growth cycle turns. However, significant up-fronting of slippages and cheap valuations (~1x FY17 P/ABV for the standalone bank) makes the stock a viable investment option from a two year perspective.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More