Financials - TOP PICKS ICICI Bank ( TP : ` 1,367, Buy) 􀁹Dolat Capital

Financials - TOP PICKS
ICICI Bank ( TP : ` 1,367, Buy)
􀁹 ICICI Bank conscious efforts towards managing lower than the system balance sheet growth over
the last few years has helped the bank to rebalance its deposit profile, improve low-cost deposit
base and maintain margin at healthy level (3% in Q4 FY12 from 2.74% in Q4 FY11)
􀁹 We believe that the loan book contraction is now over, and we expect the loan book to grow high
teens (19.8% CAGR during FY12-14E) driven by domestic corporate, retail, industrial capex &
working capital requirements
􀁹 We expect NIMs to be maintained at 2.6-2.7% on improved yield on investments, better yields on
incremental loans disbursed in 2H FY12, traction in overseas business and stability in CASA deposit
share
􀁹 We are in sync with the management stance to improve ROAA to 1.7% over the next two years
(1.5% in FY12). Standalone ROE is also set to expand to 14% and Consolidated ROE to 15% by
end of FY13.Given the adequate capitalisation, we see it better placed verses other banks to sustain
credit growth in case of an economic recovery
􀁹 We also believe that the current valuations are close to the bottom, hence offer an opportunity to
add to the positions. Our distress case scenario values the core bank at ` 505 (1xFY14E book
value) and other business at ` 200, giving us an SOTP of ` 705. At current price, the stock quotes at
1.6x and 1.5x adjusted book value (ABV) FY13 and FY14 respectively. Based on our price target of
` 1,367, the stock will trade at 2.7x and 2.4x ABV FY13 and FY14 respectively

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