ICICI Bank - 1QFY2014 Result Review - Angel Broking

ICICI Bank delivered healthy performance for the quarter, which was in line with our expectations. NII grew at healthy pace of 19.7% yoy to Rs. 3,820cr (much higher than advance growth of 12.3%). Non-interest income grew by 32.1% yoy to Rs. 2,484cr, propelled by treasury gains of Rs. 403cr during the quarter vs. a loss of Rs. 21cr in 1QFY2013. Overall, operating profit grew by healthy 29.3% yoy to Rs. 3,814cr. On the asset quality front, the bank managed to broadly hold on to its good asset quality, as Gross NPA ratio remained stable sequentially at 3.2%. Net NPA ratio increased marginally by 5bp qoq to 0.8%, as PCR declined by 140bp qoq to 75.4%. Overall, the bank delivered healthy earnings growth of 25.3% yoy to Rs. 2,274cr.

At CMP, the stock trades at 1.3x FY2015E ABV, which is below our longer term fair value estimates. Recent macro developments amidst a weak macro environment clearly suggest that the asset quality pressures for the sector are unlikely to subside as quickly as was expected earlier. Overall, we have a cautious outlook for the sector. Though, in the near term, stocks like ICICI Bank may undershoot fair value estimates, but from a relative point-of-view compared to peers, it remains one of our preferred banks, from a medium term perspective. We maintain out Buy recommendation on the stock, from a medium term perspective, with a target price of Rs. 1,131.

Source : Equity Bulls

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