Comments
IIFL
ICICI (Buy)
CMP: ₹279.30
Target: ₹360
ICICI Bank’s reported performance for 2QFY16 met our expectation but had few precious pointers to drive earnings growth expectation higher for the medium term.
Revenue growth was lower than our expectation and was a negative surprise. However, lower provisions helped the bank shore up net profit growth, in line with consensus expectations.
The bank concluded an agreement to sell 9 per cent interest in the non-life business to its joint venture partner at significantly higher value. This would provide windfall gains but it is unlikely to boost the bank’s SOTP (sum of the parts) valuation.
We keep our earnings forecast of 17 per cent CAGR over FY15-18ii for the bank unchanged for the medium term. However, this is fraught with downside risks from asset quality and margins.
The valuation of ICICI Bank has moderated significantly, and is trading in line with its one-year forward price-to-book ratio. However, it is unlikely to rerate, given a marked absence of catalysts.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.