ICICI Bank, Maruti Suzuki, SBI Life, RBL Bank, Tanla Platforms Q4 Results Review: HDFC Securities

HDFC Securities Institutional Equities

ICICI Bank - Towards sustained leadership; near optimal efficiency

ICICI Bank Ltd. beat forecasts on the back of steady margins, better operating efficiency (lower sourcing cost and limited headcount addition) and lower provisioning, offset by a slightly tepid loan growth (+16% YoY).

The bank continued to witness recoveries in line with elevated gross slippages (190 bps), resulting in further improvement in asset quality alongside steady provision coverage ratio (~81%).

Deposit growth (+19% YoY) witnessed seasonal pick-up in current accounts, resulting in a strong current account and savings account ratio at 42.2% (+255 bps QoQ), and a 10 bps QoQ spike in incremental cost of deposits.

Margins are likely to trend lower, owing to sustained deposit repricing and limited levers for yield reflation.

We believe the bank is nearing peak efficiency and has limited incremental headroom to further improve operating efficiencies; we maintain Buy with an SOTP-based target price of Rs 1,270 (standalone at 2.6 times March-26 adjusted book value per share).

Maruti Suzuki - Capex to drive growth

Maruti Suzuki India Ltd.’s Q4 FY24 PAT at Rs 38.8 billion surpassed our estimates of Rs 35.4 billion, led by a better-than-expected margin. The margin beat was led by improved capacity utilisation and cost control initiatives.

On the back of its aggressive launch spree over the last few quarters, Maruti Suzuki continues to be the market leader in the UV segment.

Exports were up 50% in FY24 and the growth is expected to continue over FY25-26. The supply of its CNG variants of popular models (such as Ertiga) is expected to ramp up with the Manesar capacity expansion.

Profitability will be better due to its CNG focus. The company has announced significant capex to double its production by 2031 (Kharkhoda, Gujarat).

The high capex may impact the free cash flow to shareholders in the medium term.

We maintain Buy with a price target of Rs 13,242 (earlier Rs 12,887).

SBI Life - Competitive moats to counter sector headwinds

SBI Life Insurance Company Ltd.’s FY24 value of new business printed at Rs 55.5 billion (+9.5% YoY), as the full-year VNB margin softened to 28.1% (-200 bps YoY) on the back of a 500 bps higher share of ULIP in the APE mix at 60% (FY23: 55%).

We build in 16% YoY growth in APE for FY25 (below guidance) on account of a lumpy base of group business during FY24.

Our high conviction Buy remains anchored on the three powerful and sustainable moats:

1. exclusive access to SBI’s massive distribution network (penetration at ~2%);

2. scope for improvement in margin accretive traditional mix; and

3. the lowest cost (excl. renewal comm)/APE ratio among peers (FY24: 41.4%).

We expect SBI Life to deliver an FY24-26E annual premiun equivaletn/VNB CAGR of 15%/15% and maintain Buy with a target price of Rs 1,733 (2.1 times Mar-26E EV).

RBL Bank - Operating efficiency critical to RoA reflation

RBL Bank Ltd. beat estimates marginally on the back of higher fee income and healthy loan growth (+19% YoY), offset by a 7 bps sequential dip in margins.

Deposit growth was strong (22% YoY), as CASA improved significantly (142 bps QoQ to 35.2%), largely on the back of seasonal growth in current accounts.

Loan growth was driven by strong traction in retail credit (58.5% of loans), led by growth in unsecured segments (CC + MFI) and secured segments like business loans and housing loans.

With its strategy to increase self-sourcing, especially from its branches, medium-term opex ratios continue to be elevated (C/I - 64%). Management focus on improving its secured mix is likely to pose pressure on incremental margins.

We believe that the operating leverage benefits are likely to accrue gradually, thus capping return on assets around ~1%; maintain Reduce with a revised target price of Rs 240 (0.9 times Mar-26 ABVPS).

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