Buy ICICI Bank; Target Of Rs 630 : Motilal Oswal

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Motilal Oswal's research report on ICICI Bank

We attended ICICI Bank (ICICIBC)'s Analyst Day, wherein the bank highlighted the progress in its different businesses and how the bank is positioned to capitalize on the exciting opportunities in the space. The topics of discussion constituted (a) how the management is trying to build a strong bank with best-in-class digital capabilities, (b) using technology to accelerate growth across business verticals and maintaining healthy operating metrics, (c) focusing on identifying potential micro markets for expansion, (d) strong demand recovery in consumption loans, with disbursements in secured loans surpassing pre-COVID levels, and (e) how asset quality has remained resilient, with the bank maintaining one of the highest coverages among private banks. ICICI Bank has historically been a technology-savvy bank and has several innovations to its credit. However, systemic asset quality concerns have taken the center-stage and diverted investor focus away from the strong digital capabilities/innovations built by the bank. New digital innovations have positioned the bank well to gain incremental market share across key product lines. ICICIBC carries an additional provision buffer of 1.3% of loans, besides robust PCR. It has suggested in the past that corporate restructuring is likely to account for less than 100bp of loans.

Outlook

The bank expects credit cost to normalize fully in FY22E, which would accelerate earnings growth. We estimate FY22/FY23 RoA at 1.5%/1.7%, enabling the bank to deliver FY23E RoE of 15.2%. We reiterate ICICIBC as one of our top buys in the sector and revise our SOTP-based Target Price to INR630 (2.2x Sep'22e ABV for the bank).

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.