Hold ICICI Bank; target of Rs 284: Reliance Securities

Reliance Securities's research report on ICICI Bank

ICICI Bank continued to surprise negatively on core operating performance and credit cost front in 2QFY18. Adjusting for one-time gain from stake sale in ICICI Lombard, its operating profit dipped by 4% QoQ, while provisioning expenses rose by 72.6% QoQ to Rs45bn. However, the Bank witnessed sequential moderation in fresh slippages to Rs46.7bn in 2QFY18 from Rs49.8bn in 1QFY18. Notably, its total stressed asset portfolio (GNPA+ Standard Restructured + Drilldown list) remained unchanged at elevated level of 12.4% of total loan book. We expect higher fresh slippages and elevated credit cost trend to continue in 2HFY18, as the Bank has not factored in divergence from the RBI’s Annual Supervisory Assessment for FY17 because it is yet to receive final report from the regulator.

Outlook
Hence, we continue to maintain our HOLD recommendation on the stock with a revised Target Price of Rs390 (from Rs348 earlier) based on 1.2x (earlier 1x) FY19E Adjusted book value. For all recommendations report, click here

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