Friday, 7 November 2008

Buy ICICI Bank; target Rs 720: Emkay Global

Emkay Global Financial Services has recommended a buy rating on ICICI Bank, with price target of Rs 720, in its reports dated November 4, 2008. "ICICI Bank’s (ICICI) reported net profit of Rs 10.1 billion, in line with our estimates. The Bank performed well at the operating level as it reported 20.2% yoy growth in NII to Rs 21.5 billion driven by 23 bps expansion in NIMs. Moreover healthy growth in fee income (albeit lower than our estimates) coupled with lower operating expenditure resulted in 42.4% yoy growth in core operating profit during the quarter."

"A slower balance sheet growth (and expanding CASA) has helped the bank to report expansion in NIMs to 2.2%. However, the bank has continued to disappoint on the asset quality as the gross slippages continue to rise. We have downgraded our earning estimates for the stock by 7% for FY09 and 5% for FY10E. The stock is currently quoting at 10.4x FY10E FDPER and 1.0x FY10E ABV. We have revised our price target to Rs 720 taking into account the deteriorating asset quality and contraction in valuation of banking sector itself," says Emkay Global Financial Services' report.

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Source: Moneycontrol

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