Maintain 'buy' on ICICI Bank - TP Rs.1036 - Geojit BNP Paribas Financial Services

- 1QFY13 PAT at Rs.1820 crore increased 36.2% yoy and net interest income at Rs.3190 crore is up 32.4% yoy driven by stable NIM of 3.01% qoq.

- Asset quality is stable.

- FY13 expected EPS is raised 7%.

- Total loans increased 21.6% yoy and 5.8% qoq. Domestic loans were up 17.2% yoy and 4.9% qoq. It seems that sustaining loan growth (20% for domestic loans and flat to marginal decline for international book) remains a key catalyst.

- It is expected that restructured loans (currently at 1.6% of total loans) to increase to 2.5-3% over FY13-14.

- The target price is at a price/book value ratio of 1.8 of FY13 adjusted book value estimates. With sustainable improvement over FY13-14 NIM by 10-15 bps, core RoE is expected to improve by 100-120 bps. It seems that there is decent potential for the stock.

- Downside risks are higher than expected restructuring/ slippages and lower than assumed loan growth.

- ICICI Bank is preferred for its operational power assets, improving return ratios, high Tier 1 capital adequacy ratio of 12.8% and provision coverage ratio of 80%.

Source : Equity Bulls

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