Buy ICICI Bank;target of Rs 405:Edelweiss

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26 Aug, 2025 12:21

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Edelweiss research report on ICICI BankICICI Bank’s (ICICI) Q2FY16 PAT at INR30bn (up 12% YoY, 2% QoQ) came in line with our estimate. Key highlights: 1) while slippages were high at INR22.4bn (>45% NPLs from restructured book), negligible restructuring restricted incremental stress formation. While lumpy exposure in some stressed segments keeps us vigilant, given adequate asset cover and tier‐ 1, we expect ultimate loss to be curtailed. It maintained credit cost guidance of 90‐95bps for FY16; 2) revenue momentum continued to be soft with NII up 13% YoY, below private peer set’s average and slower fee income traction (albeit, some QoQ momentum seen); and 3) board approved 9% stake sale of ICICI Lombard to Fairfax, valuing the business at INR172.3bn (higher than market expectation, subject to various regulatory approvals). Multiple levers of RoRWA expansion, triggers from non‐banking subsidiaries and current banking business valuations of 1.3x FY17E render favourable risk‐reward. Maintain ‘BUY’ with TP of INR405.ICICI’s well‐capitalised position (Tier I: ~12.1%), stable funding franchise and stressed assets at ~4.6% lend comfort. Further leg up may come from re‐rating of its capital market‐linked businesses, viz., life insurance. We maintain ‘BUY/SO’.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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