Buy ICICI BANK - Kotak

Q4FY12 results: Strong quarter with healthy earnings

- NII came at Rs.31.05 bn (23.7% YoY) beating our as well consensus estimate on back of 17.3% loan growth along with 27 bps improvement in NIM. Net Income also came ahead of expectations (Rs.19.02 bn; 31.0% growth) well supported by strong non-interest income (35.8% YoY).

- CASA mix remained stable QoQ at 43.5% (Q4FY12) which is key to the likely improvement in its future NIM. Positive surprise during Q4FY12 came on NIM front which rose 27 bps to 3.0%.

- Domestic loan book grew 14.3% YoY while international book grew 26.0% YoY (exchange rate movement did play an important role). Corporate book saw strong growth (27.2% YoY) while agriculture segments saw strong traction QoQ (27.8% QoQ). Retail book continues to grow at moderate pace (7.6% YoY; 9.3% QoQ) despite strong growth in its disbursements.

- Asset quality continued to improve - net NPA declined to 0.62% at the end of Q4FY12 from 0.94% at the end of Q4FY11 and 0.70% at the end of Q3FY12. In absolute terms also, it declined 23.0% YoY and 9.0% QoQ. Restructured book rose slightly during the quarter to Rs.42.6 bn (1.7% of loan book).

- Management's focus on stable growth with improving structural profitability reinforces our existing positive outlook on the stock. We are modeling earnings to grow 18.3% during FY13E and reiterate BUY on the stock with the unchanged TP of Rs.1103 (SOTP method), where the value of its standalone business comes to Rs.880 (1.6x FY13E ABV) and the value of subsidiaries at Rs.223 (holding company discount: 20% to the fair value of its subsidiaries at Rs.278).

Source : Equity Bulls

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