Dalal Street Investments

Citigroup Bullish on Vardhaman and ICICI Bank

March 9, 2007

Citigroup research is bullish on the prospects of Vardhaman Textiles [VART.BO] and ICICI Bank.

Vardhaman Textiles announced plans to de-merge the sewing thread business (14% of FY07E revenues) to its 100% subsidiary Vardhaman Yarns and Threads (VYTL). Additionally, the threads business of another 100% subsidiary, Vardhman Threads, will also be transferred to VYTL. Vardhaman Textiles’ sewing thread division will be transferred as a going concern on a slump-sale basis for Rs.2.6bn; For every 2 shares held in Vardhman Threads, equity holders would get one equity share of VYTL and one share of Vardhaman Threads.

Vardhaman textiles is expected to report a fully diluted EPS of Rs 38.64 for FY08 and Rs 51.54 for FY09. Citi recommends BUY on the stock with a target of Rs 350.

ICICI Bank is in the news after it proposed to demerge and unlock the value of its subsidiaries – mainly Insurance. Citi has recommended a BUY on ICICI Bank with a target price of Rs 1,125.

ICICI Bank will be spinning off its holdings in Life Insurance, General Insurance and Asset Management businesses into a 100%-owned holding company. The transfer – Rs19.5b (9% of capital) of its investment will be at book value. Management suggests a listing time frame of 6-9 months. ICICI is expected to report an EPS of Rs 39 for FY07 and Rs 45 for FY08. However, the re-rating in stock is only due to the listing of its insurance business. BUY on decline.


One Response to “Citigroup Bullish on Vardhaman and ICICI Bank”

  1. StockHelps on March 10th, 2007 10:44 PM

    sir any time frame for these target?



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