First View – ICICI Bank Taking Over Bank of Rajsthan

ICICI Bank may consider acquiring Bank of Rajasthan (BoR), whose promoters are being pushed by the Reserve Bank of India (RBI) to offload their stake. If the deal were to go through, then what are the synergies and over lapses, lets analyze – ICICI Bank’s 2,000 branch network would be complemented by BoR’s 463 branch network. Of these 463 branches 102 branches are in rural areas, 90 branches are in semi-urban areas and 142 branches are in urban areas.

BoR’s assets (for FY09), loans (for FY09), and market cap (latest number) totaled Rs172bn, Rs78bn, and Rs13.2bn, respectively, which equates to just 4.5%, 3.6%, and 1.3% of ICICI Bank’s comparable numbers. BoR is currently trading at 2.3X PBR (December 2009), and reported losses of Rs98mn in 9M FY10 vs. a profit of Rs40bn reported by ICICI Bank for FY10.

Without knowing the actual details of the deal, stay Neutral on ICICI Bank. Stay tuned for more developments.