Buy ICICI Bank Limited For Target Rs.1,195 - LKP Securities
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Result and Price Analysis:
Earnings in 2QFY24 re-acknowledge our conviction that ICICI Bank is maintaining a sustainable and prudent growth led by tech-driven initiatives. The bank has reported its 2QFY24 results with the key pointers being: 1) Strong NII growth of 24% YoY, with headline NIMs (Domestic: 4.61% & Overall: 4.53%) down sequentially led by higher COF. 2) PPoP growth higher sequentially driven by healthy NII and stable C/I (40.8%), 3) Reported slippages (?46.8bn v/s ?53.1bn in 1QFY24) decreased sequentially, 4) NNPA ratio improved further at 0.43%, 5) PCR (excluding technical write-offs) stood at 83%. However the bank didn’t include contingent & floating provision (~?229bn) in PCR calculation; 7) Contingent provision (excluding PCR) stood at 2.1% of the loan book, 8) BB & below exposure stable sequentially to 0.7% of net wholesale advances, 9) the bank’s net advances grew by 18.3% YoY and 5% sequentially; and 8) deposits stood at ?12.9tn mark and grew sequentially by 4.5% with average CASA at 40.8%. Moreover, provision expenses inched down sequentially to ?5.8bn v/s 12.8bn in 1QFY24. Factoring stable balance sheet growth and credit cost of below 1% in FY24E, we estimate the bank’s FY24E ROA and ROE of 2.1% and 16.8% respectively. We have positive outlook on the Bank with BUY rating
Gazing the Core:
Asset quality a positive outcome; retail slippages down sequentially: Slippages were down to ?46.9bn v/s ?53.2bn in the previous quarter. Retail slippages and Corporate & SME slippages contributed 93% and 7% respectively. Despite significant contribution, retail slippages decreased by 14% sequentially. The standard restructured (0.32% of portfolio) book inched down sequentially to ~?36bn. Retail book contributed ~85% of restructured pool (Over 95% are secured), while rest is from corporate and SME book. The bank carries provision worth ?11bn (~31% covered) against the restructured pool. The absolute GNPA decreased by 6.2% sequentially led by lower slippages. As on 2QFY24, the bank’s GNPA/ NNPA/PCR stood at 2.48%/0.43%/83% against 2.76%/0.48%/83% in the previous quarter
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SEBI Registration number is INM000002483
