Buy ICICI Bank; target of Rs 300: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on ICICI BankICICIBC reported 9% miss on adj. PBT (ex. contingency provisions), impacted by weak core PPoP growth – 3% YoY (marred by moderate loan growth and higher stress addition). In 4QFY16, ICICIBC created one-off contingency provision of INR36b which was partly offset by deferred tax provision reversal of INR22b. In addition to existing stressed loans (NPA + RL), bank disclosed a watch-list of below investment grade exposures in key stressed sectors amounting to INR440b (4.8% of exposure). List includes non-fund based exposure, sanctioned but un-utilized limits, and exposure which are at advance stage of resolution; hence it’s difficult to estimate o/s amount on balance sheet. However, bulk of the corporate NPLs over FY16-18E is likely to come from the watch-list and RL. We cut estimates by ~18% over FY16-18E (refer page 7). While near term asset quality challenges persist, strong capitalization (CET1 of 13.1%), significant improvement in granularity of loan book (~52% retail and SME), sharp improvement in liability profile and valuation at 1.1x core AP/ABV keeps us positive. We roll forward target price to FY18 and maintain Buy with SOTP of INR300 (v/s INR320 previously) implying 27% upside. 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.

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