Aug 07, 2013, 02.47 PM IST
Ajcon Global is bullish on ICICI Bank and has recommended 'Buy' rating on the stock with a target price of Rs 1,050 in its research report dated July 06, 2013.
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Buy ICICI Bank; target Rs 1050: Ajcon Global
Ajcon Global is bullish on ICICI Bank and has recommended 'Buy' rating on the stock with a target price of Rs 1,050 in its research report dated July 06, 2013.
Like this story, share it with millions of investors on M3
Buy ICICI Bank; target Rs 1050: Ajcon Global
Ajcon Global is bullish on ICICI Bank and has recommended 'Buy' rating on the stock with a target price of Rs 1,050 in its research report dated July 06, 2013.
"ICICI Bank reported a healthy performance which was evident in the form of 25.3 percent growth in standalone profit after tax to Rs. 22.74 bn in Q1-2014 on account of healthy growth of 12.6 percent on yoy basis in Retail loan book which forms 36 percent of the total Loan Book. On a consolidated basis too, PAT witnessed yoy growth of 32.3 percent to touch Rs. 27.47 bn in Q1FY14. Net interest income too increased by 19.6 percent on yoy basis; net interest margin improved from 3.01 percent in Q1-2013 to 3.27 percent in Q1-2014 owing to improvement in CASA ratio to 43.2 percent in Q1FY14 as compared to 41.9 percent as on March 31, 2013. Operating profit jumped by 29.3 percent on yoy basis to Rs. Rs. 38.14 bn owing to NII growth and non interest income growing by 32.1 percent. The bank sees a growth in the fee income especially on the retail side and forex and commercial side. This quarter treasury income increased on account of realized gains in fixed income portfolio while other income increased due to dividend income of subsidiary companies Going further the bank expects to improve NIM by 10bps and to maintain Cost to Income at 40 percent. Net NPA ratio of 0.69 percent at June 30, 2013 (March 31, 2013: 0.64 percent; June 30, 2012: 0.61 percent). Consolidated return on equity (annualised) for Q1- 2014 stood at 15.6 percent compared to 13.3 percent for Q1-2013 and one of the best Return on Asset ratio (1.76 percent) in the industry."
"We believe ICICI Bank is poised for a big leap similar to its immediate peer HDFC Bank. Structural factors like focus on retail segment, high CASA ratio with 3,350 branches, steady loan growth, low cost structure, lower NPAs, high CRAR, good return ratios, makes it a value buy at CMP and believe that rerating is on the cards soon. The current stock price reflects temporary aberrations. In our view, ICICI Bank is well placed to tackle the current difficult circumstances. According to us, the Bank's stock needs to be rerated on the valuation front owing to the above factors and robust Q1FY14 result among all Private Sector Banks so far. We believe the Bank deserves premium vis-à-vis peers as compared owing to a) healthy growth in overall business, b) higher retail lending, c) improvement in domestic NIMs, d) domestic CD ratio of 80 percent, e) low NPA's amidst difficult environment, f) high PCR of 75.4 percent, g) favorable Cost to Income Ratio of 39.5 percent, in depressed macro conditions instills confidence which makes us optimistic on future performance."
"At CMP, the stock is available at attractive valuation of P/BV: 1.37x (Q1FY14 Book value) which we feel is undervalued compared to its peers like HDFC Bank, Axis Bank, Kotak Mahindra Bank, ING Vysya, Karur Vysya and Indusind Bank. Considering Bank's good performance in all fronts despite stressful economic conditions, we recommend investors to "BUY" with a target price of Rs. 1,050 (P/BV of 1.5x at FY14E Consolidated Book Value Q1FY14 stood at Rs. 628) an upside of 21 percent from current levels," says Ajcon Global research report.
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