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Buy ICICI Bank – Enam Securities

August 14, 2007

Enam Securities Research has recommended a BUY on ICICI Bank with a price target of Rs 1260, potential upside of 42%.

ICICI Bank’s stock has recently underperformed the banking sector, largely due to the huge equity offering along-with a relatively weak Q1 results. Higher Gross NPAs, pressure on NIMs, low ROE, impending risk of a slowdown in credit growth are other dampeners on the stock price.

NIM has likely bottomed out, fee-income growth remains on track and asset growth of 25-30% is achievable. New premiums in Life Insurance are likely to show better growth in coming months with base effect tapering off from Q2 onwards.

ENAM arrives at a stock price of Rs 1260 based on the Sum of Parts Valuation of ICICI Bank which is as follows,

ICICI Bank 833
Mutual Fund Business 19
Life Insurance 225
General Insurance 31
I-Sec (Group) 27
Overseas Banking subsidiaries 77
Other investments 48 – ICICI Venture/ NSE/ FirstSource

Also read value of insurance subsidiaries in Bajaj Auto and HDFC .

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