ICICI Bank climbed 7 per cent in Monday’s trade after the lender came up with better-than-expected quarterly numbers for the September quarter.
“Barring the tepid profitability, it was a quarter full of positives for ICICI Bank as the uptick in growth and NIMs sustained. Robust fee growth (up 17 per cent YoY), curtailed costs and lower provisions led to a strong operating performance despite the treasury loss,” said HDFC Securities.
The pullback in asset quality and uptrend in coverage were inspiring, the brokerage said.
The stock rose 7.19 per cent to hit a high of Rs 337.70 on BSE.
The bank posted 55.84 per cent year-on-year fall in standalone profit at Rs 908.88 crore for the quarter ended September 30. It had posted a net profit of Rs 2,058.19 crore in the corresponding quarter last year. Analysts in an ET Now poll had estimated the profit figure at Rs 815 crore.
Asset quality of the lender improved during the quarter under review. Percentage of gross non-performing assets (NPA) eased to 8.54 per cent in Q2FY19 over 8.81 per cent in Q1FY19. Percentage of net NPA also improved to 3.65 per cent from 4.19 per cent during the period.
Net interest income of ICICI Bank jumped 12.41 per cent YoY to Rs 6,417.58 crore during the quarter under review. The net interest margin stood at 3.33 per cent in Q2FY19.
Nirmal Bang Institutional Equities has revised its earnings estimates for FY19/FY20/FY21 and retained ‘Buy’ rating on the stock, retaining its target price of Rs 411.
“At the current stock price, the core lending franchise of the bank is available at 1.1 times P/Book FY20E, with a RoA of 1.4 per cent for FY20E. ICICI Bank’s target price (Rs 404) includes Rs 110 per share contributed by the bank’s stake in its non-banking subsidiaries and other equity investments,” said Emkay Global in a note.
“We have based the general insurance and securities business valuation on current market cap while the life insurance and AMC business valuation is based on our target price for it,” the brokerage said.