Brokerage firm Prabhudas Lilladher has suggested buying shares of ICICI Bank, with a price target of Rs 1090 on the shares.
ICICI Bank had a stable quarter with core PAT up 1.6%. The better loan growth and the NIM were partly offset by the lack of opex. According to the bank, operating expenses could remain elevated as a healthy revenue profile provides room to invest in business. QoQ loan growth was largely driven by retail, while corporates and BuB also saw traction. The NIM rose 19 basis points QoQ to 4.76% due to a slower rise in the cost of funds. TD rose 4.3% QoQ and management said RTD rates have accelerated in recent weeks, which could boost RTD flows.
“As a result, the cost of funding may increase at a faster pace in the coming quarters, which may halt the rate of increase in the NIM. Led by lower slippages, the GNPA was cut by 17 basis points QoQ at 3.2% and buffer provisions of 15 billion rupees were created, bringing its total pool to 100 billion rupees, or 1.5% of RWA.Moving towards the September 24 base ABV, we let’s keep the multiple at 3.0x and raise the target price based on SOTP from Rs 950 to Rs 1090. Keep buying,” Prabhudas Lilladher said in his report.
Slightly higher base profits due to better NIM
According to the brokerage, NII was a beat to Rs 147.9bn (est. Rs145bn) led by slightly better growth in loans and NIM. Loan growth was 22.7% year-on-year (PLe 22%) while deposit growth was 11.5% year-on-year (PLe 11%). NIM (calc) was 4bps higher at 4.76% (PLe 4.72%), +19bps QoQ, driven by a lower CoF upside to 3.95% . Other income was higher at Rs 50.5 billion (Ple Rs 46.6 billion), driven by dividend income, while cash recorded a loss of Rs 0.85 billion. Opex was a shortfall at Rs81.6bn (PLe Rs80.2bn) as other opex were higher. The PPoP was 116.8 billion (PLe Rs111.4 billion), +17.8% year-on-year. Core PPPoP was Rs111bn higher by 2.5%. Asset quality improved with GNPA/NNPA falling 17bps/8bps QoQ to 3.24%/0.6%. Provisions were Rs16.4 billion (PLe Rs15 billion). PAT was a beat at Rs75.6bn (est. Rs72.5bn) while core PAT at Rs71.25bn was 1.6% higher
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Article first published: Wednesday, October 26, 2022, 11:48 a.m. [IST]