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Last Updated : Jul 27, 2020 01:42 PM IST | Source: Moneycontrol.com

ICICI Bank share price slips 2% post Q1 numbers; brokerages maintain buy call

Domestic loan book grew by 10 percent in June quarter with retail loan portfolio growth at 11 percent.

ICICI Bank share price shed 2 percent in early trade on July 27 after the company reported its June quarter numbers.

The bank on July 25 reported Q1 FY21 profit at Rs 2,599.1 crore, a growth of 36.2 percent year-on-year backed by some stake sale in general and life insurance subsidiaries. But the additional COVID-19 related provisions of Rs 5,550 crore limited the profit growth.

Net interest income during the quarter increased by 20 percent to Rs 9,280 crore compared to the corresponding period of the previous fiscal, with loan growth of 7 percent and strong deposits growth of 21 percent YoY.

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Domestic loan book grew by 10 percent in June quarter with retail loan portfolio growth at 11 percent, while growth in the performing domestic corporate portfolio was about 8 percent YoY.

Dolat Capital

Dolat Capital maintained buy recommendation on the stock with a SOTP-based target price of Rs 500, valuing the standalone bank at 1.7x FY22E book, while including the value of subsidiaries implies 2.3x of FY22 P/ABV. The bank remains amongst the preferred picks in the sector.

Motilal Oswal

ICICI Bank has reported a steady quarter amidst a tough macro environment. Earnings were in line despite the bank prudently making higher provisions toward COVID-19. Overall, the moratorium book has declined, but it is still higher versus peers. The bank has built a relatively higher provisioning buffer at 1.3 percent of loans to endure the COVID crisis.

BB and below the pool is likely to increase as effects of the pandemic play out and the moratorium period ends. On the other hand, deposit growth remains strong with cost of deposits declining to 4.5 percent – the lowest amongst private players, which provides ICICI Bank with a structural competitive advantage. Motilal Oswal expects credit cost to remain elevated at 3.2%/2.0% for FY21/FY22E. It has maintained buy with an unchanged SOTP-based target price of Rs 475.

Prabhudas Lilladher

ICICI Bank PAT of Rs 25.9 billion saw a marginal miss on back much higher prudent COVID-19 impact provisions of Rs 55 billion. Core PPOP grew by 15 percent YoY on back of strong 20 percent YoY NII growth & lower other opex offsetting a weak fee income. A slight disappointment was on NIMs which declined by 18bps QoQ to 3.69 percent owing to a strong flow of deposits (21% YoY/4% QoQ was best amongst banks) creating large liquidity position.

Moratorium book which has been focus point to track asset quality & collection was down to 17.5 percent of loans versus 30 percent in April end and has Rs 83 billion of COVID provisions or 1.42 percent of domestic loans. Strong liability base, strong capital levels (raising more equity ahead), steady asset quality with strong PCR of 78 percent remains a strong focal point, while real asset quality hits, if any, only will be visible from September end. Prabhudas Lilladher retained buy with a revised target price of Rs 462 (from Rs 436) based on 1.8x FY22 ABV.

Sharekhan

For ICICI Bank, Sharekhan uses the SOTP methodology, where it values the standalone bank at 1.6x its FY2022E BV and rest of the subsidiaries at Rs 140 per share. Broking house believes valuations are reasonable, considering the overall franchise value as a whole and strong capitalisation and a high PCR being key comfort factors.

The expected capital raising will further augment the capital base and balance sheet strength. At present valuations, it offers a reasonable entry point for longterm investors. It maintains its buy rating on the stock with a revised price target of Rs 485.

At 09:18 hrs, ICICI Bank was quoting at Rs 374.40, down Rs 7.45, or 1.95 percent on the BSE.
First Published on Jul 27, 2020 09:40 am
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