Prabhudas Lilladher has given Buy recommendation for ICICI Bank with a target price of Rs. 700 in its research report issued on Apr 26, 2021
Prabhudas Lilladher’s research report on ICICI Bank
ICICIBC reported a miss on earnings of Rs44.0bn (PLe: Rs49.5bn) largely due to additional contingent provisions of Rs10bn to remain conservative given the emerged second wave. Bank in past 2-3 years has relentless focus on improving and building a strong operating profitability and simultaneously moving to better rated assets, renewed underwriting & credit delivery and mining of existing franchise strength. This has led to strong loan & low cost deposit growth leading to better risk-adjusted led profitability. Asset quality has been steady with much low corporate stress, while strong growth in retail in last 2-3 years is seasoning the book which should continue ahead. Strong provision buffer of 100bps & PCR maintained at 77% should help credit cost normalize much faster leading to ROEs moving to 15% by FY23 from 13% currently.
We retain BUY with revised TP of Rs700 (from Rs630) based on 2.2x (from 2.0x) Mar FY23 ABV and 155 per share value of Subs.