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Banks: Buy ICICI…
Business getting back on track: Credit growth to gain pace, which until recently has been slow. The
mgmt has guided for a loan book growth of 18-20% by Mar-11
Lower delinquencies to reduce provisioning requirement: The pace of NPA accretion has slowed down
over the past few quarters. Moreover, with increase in share of secured loans, delinquency levels are
likely to remain under control
The bank has one of the best capital adequacy ratios in the industry with total CAR at 20.2% (Sep
2010). With increase in leverage levels, the return ratios are likely to improve
After the merger with Bank of Rajasthan, the number of ICICI’s branches has crossed the 2,500 mark
by Sep-10, which will help in increasing traction in the retail business and accumulation of CASA
deposits
The bank is aiming at monetizing its stake in the non-banking subsidiaries including life insurance
over the next few years
We have a TP of Rs 1,324 with a BUY rating on the stock [2.5 x FY12E Adj. BV (adjusting for value and
cost of investment) + Rs 352 value of investments] – upside of 24% from CMP
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