August 26, 2017 . Equities Desk

On a path of recovery…

ICICI Bank is India’s largest private sector bank with total assets of Rs771,791cr as of FY17 and profit after tax of Rs9,801cr in FY17. It currently has a network of 4,852 Branches and 13,780 ATM’s across India. The bank has achieved consistent growth over the last 5 years with a CAGR (FY12-17) of 10% in Total Assets, 14% in Total Deposits, 13% in Total Advances and 9% in Net Profit.

Valuation: Although asset quality stress will impact near-term outlook, we expect the bank’s core performance to improve by FY19E and deliver RoE and RoA of 11% and 1.4%, respectively. Further, we like ICICI bank given its improving B/S mix with higher contribution from granular business (Retail) coupled with strong capitalization. Hence, we initiate coverage withj BUY rating on the stock with a TP of Rs325 using sum of the part (SOTP) methodology, where we value its standalone business at Rs244 (P/ABV of 1.8x for FY19E) and subsidiaries at Rs81.

Research Report ICICI Bank Ltd. (1)

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