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Prabhudas Lilladher Report
ICICI Bank Ltd. delivered good numbers yet again with core pre-provision operating profit at Rs 130 billion beating PLe by ~7% led by superior core revenue. Gross non-performing assets was lower led by lesser net slippages which resulted in benign credit costs.
Loan accretion at 5.0% QoQ was ahead, driven by growth in high yielding segments (personal loan/ credit card, small and medium enterprises, auto). Although net interest margin declined by 21 basis points QoQ to 4.83%, it was 13 bps ahead of our estimate due to better treasury management and lower funding cost.
Bank expects NIM for FY24E to be similar to FY23. We raise FY24/25/26E core profit after tax by 3.0-4.0% due to NII increase and lower provisions. Likely return on assets/return on equity for FY25/26E is 2.0%/17.0%.
ICICI Bank is valued at par with HDFC Bank Ltd. at 2.2 times/1.9 times on FY25/26E core adjusted book value; with recent correction in ICICI Bank it should outperform HDFC Bank in near term.
Maintaining multiple at three times, as we roll forward to September-25 core adjusted book value, we raise SOTP based target price to from Rs 1180 to Rs 1280. Reiterate ‘Buy'.
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