Arihant Capital has given Buy recommendation for ICICI Bank with a target price of Rs. 971 in its research report issued on Apr 25, 2022

Arihant Capital’s research report on ICICI Bank

ICICI Bank reported profit of INR 7,019 cr (+59% YoY/+13% QoQ) was 10% higher than our estimate driven by a sharp decline in provision (-63% YoY/-47% QoQ) and consistent strong operating performance. NII for the quarter grew by 21% YoY/3% QoQ to INR 12,605 cr, led by strong advances growth of 17% YoY. Operating profit of the bank increased by 21% YoY/1% QoQ to INR 10,293 cr driven by strong operating income growth. Other income for the quarter grew by 15% YoY to INR 4,737 cr. Asset quality of the bank improved with GNPA at 3.6% vs. 4.1% QoQ led by strong recoveries & upgrades and negative net slippages. Restructuring pool of the bank declined from 120 bps to 100 bps QoQ at INR 8,267 cr. The sequential decline in outstanding balance was mainly due to prepayment by a borrower in the construction sector. Bank has made additional contingent provision of INR 1,025 cr during the quarter and holds provision buffer of INR 7,450 cr (0.9% of advances) which provides comfort over balance sheet position.

Outlook

We expect bank to achieve standalone ROAs of 1.8% and ROEs of +14-15% by FY24E. Maintain our Buy rating on the stock with SOTP based target price of INR 971, based on 2.6x FY24E P/ABV for standalone bank and INR 161 for subsidiaries.

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