Buy ICICI Bank; target of Rs 308: Khambatta Securities

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26 Aug, 2025 12:21

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Khambatta Securities's research report on ICICI BankICICI Bank’s reported highly disappointing 4Q FY16 financial results due to collective contingencies and related reserve. During the quarter, bank made extra provision of Rs 36.0 bn, which dented the net profit. During the quarter, bank’s asset quality deteriorated significantly because of asset quality review (AQR) by RBI, resulting significant surge in provisions and contingencies. During the quarter, Net interest income (NII) was marginally down from our estimate due to non-accrual of income on the higher level of additions to non-performing assets while operating income and operating profit remained higher than our estimates aided by substantial growth in non-interest income but net profit was down from our estimate by huge margin due to higher provisions. During the quarter, bank reported muted growth in NII to Rs 54.05 bn, registering 6.4% y-o-y against our estimate of Rs 57.01 bn. The muted growth in NII was attributable to non-accrual of income due to higher slippage and net interest margin also contracted by 20 bps y-o-y and 16 bps q-o-q to 3.37%. At CMP of Rs 221, we continue with “Strong Buy”. At CMP, stock is trading at 1.54x FY17E standalone adjusted book value (ABV) of Rs 143.7 and 1.40x FY18E standalone ABV of Rs 157.8. Adjusting the subsidiary companies’ valuation of Rs 71/share, ICICI bank’s stock is available at 1.03x FY17E and 0.97x FY18E. Our valuation is based on sum-of-the-parts methodology. The valuation of ICICI Bank standalone is Rs 237/share based on 1.5x FY18E standalone ABV of Rs 157.8 and the valuation of subsidiaries is Rs 71/share (after offering 25% discount). Consequently we arrive at target price of Rs 308/share per share, representing ~ 39% upside. At CMP of Rs 221, we continue with “Strong Buy”. 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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