Moneycontrol
Last Updated : Oct 29, 2018 12:37 PM IST | Source: Moneycontrol.com

Should investors buy, sell or hold ICICI Bank post Q2 earnings

Asset quality improved during the quarter. Gross non-performing assets as a percentage of gross advances were lower at 8.54 percent against 8.81 percent in the previous quarter due to fall in slippages.

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Shares of ICICI Bank gained more than 9 percent on Monday after company reported its September quarter numbers on October 26.

The company's second quarter profit fell sharply by 55.84 percent to Rs 908.88 crore compared to the year-ago period. Elevated provisions and high treasury base hit the bottom line.

Profit in the corresponding period last fiscal stood at Rs 2,058.2 crore. Overall numbers were in line with analyst expectations.

Net interest income, the difference between interest earned and expended, grew 12.41 percent on year to Rs 6,417.6 crore with good loan growth of 12.8 percent YoY and margin improvement.

The bank said advances at the end of September quarter stood at Rs 5.44 lakh crore, up from Rs 4.82 lakh crore in the same period last year.

ICICI Bank said the net interest margin at 3.33 percent in second quarter of current financial year improved 14 basis points (bps), from 3.19 percent in first quarter FY19.

Asset quality improved during the quarter. Gross non-performing assets as a percentage of gross advances were lower at 8.54 percent against 8.81 percent in the previous quarter due to fall in slippages.

Check out what brokerages say about the ICICI Bank:

Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 460

The company is one of our preferred stocks and will see continued core PPoP growth as NIM starts expanding, said Morgan Stanley.

Brokerage: Nomura | Rating: Buy | Target: Rs 415

Nomura believes that the bank has beat on most counts as asset quality is bottoming, while PPoP outlook is improving.

It believes that RoE recovery will be faster than earlier expected.

It increases FY21e estimates by 5% and ROEs to 15%. The valuations at 1.4x Sep 2 of book us very attractive.

Brokerage: Macquarie | Rating: Outperform | Target: Rs 416

According to Macquarie the Q2 profit is better than expectations due to higher NIMs. The key positives were lower slippage and better loan growth.

It’s one of our top picks, it said.

Brokerage: Citi | Rating: Buy | Target: Rs 390

Research house believes that the second quarter is a healthy quarter, as NIM Improves and PCR increases. The bank continues to focus on improving core operating profit and well positioned in terms of ALM with high CASA ratio.

It feels that the loan growth should drive NIM expansion.

The credit costs decline in FY20 can be significant, while core banking business at 1.2x FY20e is attractive.

The Research house lowers FY19 PAT estimate by 5% to factor in miss of Q2FY19.

Brokerage: BNP Paribas | Rating: Buy | Target: Rs 410

According to BNP Paribas there is moderation in fresh slippages, which is lowest in 11 quarters. The company retained its FY20 guidance of 15% RoE.

The company to focus on retail and net NPA target of 1.5% is possible. Standalone FY20e P/B of 1.2x is a good opportunity to enter, it added.

At 10:50 hrs ICICI Bank was quoting at Rs 341.85, up Rs 26.80, or 8.51 percent on the BSE.

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First Published on Oct 29, 2018 10:50 am
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