ICICI Bank - Healthy Numbers, Stable Asset Quality; Upgrade To Buy - Nirmal Bang

ICICI Bank posted net earnings of Rs22.5bn for 3QFY13 aided by NII growth of 29.0% YoY and stable asset quality. Asset quality remained stable on higher loan recovery and upgradation even as gross non-performing assets (GNPAs) and net non-performing assets (NNPAs) declined sequentially to 3.31% and 0.76%, respectively.

With asset quality concerns easing and foreign capital inflows to benefit the economy, we believe ICICI Bank, India's second-largest bank, would be comfortably placed, considering its pan-India distribution network and improving RoE.

Rolling forward our target multiple to FY14 adjusted book value, we have upgraded our recommendation and target price on the stock to Buy (from Sell earlier) with a target price of Rs1,450 (from Rs877 earlier) based on SOTP valuation. Our target price values the standalone entity at 1.9x FY14E ABV from 1.5x FY13E ABV, implying an upside of 22% from the current market price.

Source : Equity Bulls

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