Buy ICICI Bank - Target Price Rs. 1330 - Dolat Capital

- ICICI Bank is one of our preferred pick for the sector. We expect improvement in banking ROE to continue and touch 17%+ by FY15E. Asset quality would remain stable in our view and would ensure stable credit cost.

- We believe that as the overall economic condition improves, ICICI in addition to ROE, would also start showing an improving growth trend in balance sheet. Coupled with stable asset quality we believe that the bank should trade at its historical average of 2x forward PBR on banking book value.

- We estimate that the loan growth would be closer to 20% in FY14E (16% YoY for 9MFY13) as the retail loans picks up further driven by mortgages and car loans. While the new project sanctions have slowed down, the disbursement from existing sanctioned book and working loan demand should be sufficient to drive 25% + loan growth in the corporate book.

- ICICI Bank's Tier I of 13.25% is one of the highest in industry and should be sufficient to fuel its growth over the next 3 years. We remain positive on the stock with SOTP based target price of Rs. 1330. Our target is based on PBR of 2x on FY14E banking BVPS and Rs. 283 for the value of investments.

Source : Equity Bulls

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