Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ahead of guidance
In 4Q ICICI maintained its recent track record of surprising positively on
core operating parameters. Loan growth picked up, margins improved
and fresh NPL formation was negligible. The management is guiding for
flat margins for FY12; we however believe margins will expand +10bps
and loan growth would be higher than the guidance of 20%. ICICI’s ROA
of 1.5% may improve further; rising leverage will drive ROE expansion to
+17% by FY13. With consolidated profits being 18% ahead of standalone
profits and growing at a healthy pace, ICICI is trading at an attractive
13x FY13 consolidated P/E. Raising earnings by 2-4%; Maintain BUY.
Beating guidance consistently
With focus back on growth, ICICI’s loan growth of 19% was at the higher end
of its guidance range and NIMs improved 10bps QoQ to 2.7% v/s guidance of
QoQ contraction. Loan growth (19%YoY) was well spread: retail disbursement
picked up, domestic corporate book grew 42% and international loans growth
also surprised on the upside (22%). Fee growth improved and is likely to
grow in line with balance sheet growth. Even though the management is
guiding for flat NIMs in FY12, we believe NIM will expand +10bps on back of
re-pricing of assets and expansion in overseas spreads. Margins are likely to
expand to ~3% in 2HFY13.
RoA of ~1.5% improves visibility of +17% RoE
ICICI’s reported RoA was 1.5% after providing for Rs2bn of treasury loss on
equity portfolio and on security receipt issued by ARCs. With expansion in
NIM and lower treasury losses, RoA may expand to 1.6%, improving visibility
for RoEs in high-teens. NPL formation is at cyclical low levels but we believe
normalised loan loss provisioning is unlikely to be materially higher than the
current levels of 80bps of loans, due to changes in loan mix.
Attractively valued; Maintain BUY
We are raising earnings by 2-4% and expect profit to grow at 28% Cagr over
FY11-13. While muted loan loss charges will be key to bank’s earnings growth
in FY12, earnings growth in FY13 would be driven by NIM expansion and
lower treasury losses. ICICI’s consolidated profit for FY11 was 18% ahead of
standalone profits despite a one off provision of Rs2.7bn in general insurance
business (figure 18); ICICI trades at 13x FY13CL consolidated PE. With its
healthy earnings growth, expanding RoE and lower vulnerability to margin
and asset quality pressures, we believe the stock can re-rate. We maintain
our BUY recommendation with target price of Rs1,390.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ahead of guidance
In 4Q ICICI maintained its recent track record of surprising positively on
core operating parameters. Loan growth picked up, margins improved
and fresh NPL formation was negligible. The management is guiding for
flat margins for FY12; we however believe margins will expand +10bps
and loan growth would be higher than the guidance of 20%. ICICI’s ROA
of 1.5% may improve further; rising leverage will drive ROE expansion to
+17% by FY13. With consolidated profits being 18% ahead of standalone
profits and growing at a healthy pace, ICICI is trading at an attractive
13x FY13 consolidated P/E. Raising earnings by 2-4%; Maintain BUY.
Beating guidance consistently
With focus back on growth, ICICI’s loan growth of 19% was at the higher end
of its guidance range and NIMs improved 10bps QoQ to 2.7% v/s guidance of
QoQ contraction. Loan growth (19%YoY) was well spread: retail disbursement
picked up, domestic corporate book grew 42% and international loans growth
also surprised on the upside (22%). Fee growth improved and is likely to
grow in line with balance sheet growth. Even though the management is
guiding for flat NIMs in FY12, we believe NIM will expand +10bps on back of
re-pricing of assets and expansion in overseas spreads. Margins are likely to
expand to ~3% in 2HFY13.
RoA of ~1.5% improves visibility of +17% RoE
ICICI’s reported RoA was 1.5% after providing for Rs2bn of treasury loss on
equity portfolio and on security receipt issued by ARCs. With expansion in
NIM and lower treasury losses, RoA may expand to 1.6%, improving visibility
for RoEs in high-teens. NPL formation is at cyclical low levels but we believe
normalised loan loss provisioning is unlikely to be materially higher than the
current levels of 80bps of loans, due to changes in loan mix.
Attractively valued; Maintain BUY
We are raising earnings by 2-4% and expect profit to grow at 28% Cagr over
FY11-13. While muted loan loss charges will be key to bank’s earnings growth
in FY12, earnings growth in FY13 would be driven by NIM expansion and
lower treasury losses. ICICI’s consolidated profit for FY11 was 18% ahead of
standalone profits despite a one off provision of Rs2.7bn in general insurance
business (figure 18); ICICI trades at 13x FY13CL consolidated PE. With its
healthy earnings growth, expanding RoE and lower vulnerability to margin
and asset quality pressures, we believe the stock can re-rate. We maintain
our BUY recommendation with target price of Rs1,390.
No comments:
Post a Comment