Accumulate ICICI Bank - Dolat Capital

- ICICI Bank continues to be on our preferred list on the back of sustained earnings growth, well capitalized balance sheet to capture uptick in credit growth and credit costs in control.

- We estimate loan book growth 19% CAGR for FY12-14E. We expect it to record NIMs of 2.8-2.9%, backed higher yield on investments, reduction in losses on securitized book and stability in CASA deposit share

- On non-interest income front, we expect core fee income to improve on the back of higher credit book expansion (14% CAGR in FY12-14E)

- One of our key arguments to favor for ICICI Bank has been the well managed credit costs. We factor gross slippages ratio to come down 18 bps yoy to 135 bps for FY14

- Valuations at 2.1x P/ABV FY13E and 1.9x P/ ABVFY14E have scope for an upgrade over next few quarters. Our SOTP price for core banking business implies a 2xFY14E P/ABV, and Rs.293 for other businesses. Based on this, our SOTP value comes to Rs.1,309 per share.

Source : Equity Bulls

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