As posted on 05/04/2016:
Trading Idea: ICICI Bank
CMP: 239
Either sell below 245 or in rise around 255-270;
TGT: 230*-223-215*-203-190-180* & 160-145 (1-3/6M)
TSL> 280
Note:
Consecutive closing (3 days) above 280 for any reason, ICICI may
further rally up to 295-301* & 310-320* and 335-355-395*-425 in the
near to long term (alternative bullish case scenario).
Technically, the above trading levels are still in play and ICICI need to stay above at least 260-270 zone for any rally; otherwise it may fall around 219-215 shortly.
Q4FY16 result of ICICI was much below street estimates in nearly all parameters, even after considering the RBI-AQR/other exceptional provisions.
Q4FY16 EPS reported as 1.20 against estimate of 5.35 (lagged by 77.47%) and down by around 76% both QOQ (5.17) and YOY (4.99).
More importantly apart from the exceptional provisions and other income (profit from insurance stake sale), core operating profit (OP) came at Rs.4976.50 cr against 5316.80 (QOQ) & 5468.29 (YOY); i.e. operating EPS almost down by 6.44% (QOQ) & 9.27% (YOY).
Total Q4FY16 NPL in the ICICI book is reported as Rs.21870 cr against 21308 (QOQ) & 17342 (YOY). Against the gross NPL of 21870, the bank has taken a total provision of around Rs. 6926 cr as on Q4FY16.
Total advances (loan book ?) of ICICI is around Rs.435264 cr as on Q4FY16; i.e. the bank has shown only around 5% of the total loan book as stressed. Out of the total loan book, around 27.5% is for domestic corporates, 4.3% for MSME (total 31.8%), retail around 46.6% and international segment around 21.6%. As par post result analytical presentation, around 13.3% of the total loan book is exposed to highly stressed sectors (like Power/Steel/Mining/Cement/Oil Rigs); i.e. nearly 50% of the corporate loan book is stressed (around Rs.57890.11 cr) and the bank is not very much optimistic about its future prospect too !!.
Axis Bank, in the similar situation of stressed assets, expecting that 60% of their "watch list" may be completely write off in the quarters ahead. If, we assume the same trend as par the domestic macroeconomic situation and some other common factors, the present NPL of the ICICI may be around Rs.35000 cr and thus another Rs.13000 cr may be reported in the next two quarters as well.
As par some analysis, around 15% of total loan book of the Indian Banking System may be under severe stress (NPL) and that translate around Rs.65000 cr of NPL may be there in the ICICI Bank also.
The present NPL situation of the banks may be now emerging from the 2010-12 loan sanctions and some analysts are are also apprehending that more such stressed assets may come into the light as there are visible stress in the agri, MSME sector apart from the ongoing corporate woes (problem of Twin Balance Sheet in India). Also, if macroeconomic situation will not improve in reality, retail loans may also come under severe stress in future as they are also part of the overall domestic & global economy. Also, may private banks do provide unsecured personal loans for use in business purpose, specially for MSME sector, where MSME usually took the main business/project loan from a PSB. So, deterioration of overall business sentiment and ground reality may also affect the highly acclaimed so called "Retail Loans" to some extent.
For ICICI Bank (Standalone):
Q4FY16 TTM EPS: 16.64 (FY16/Actual)
Projected FWD EPS: 17.50-19.35-21.45 (FY:17-19/Estimated)
(Though as par recent EPS & provision trend, Q1FY17 EPS may be reported around 0.51 and FY17 at - 6.62).
Average PE: 15
Q4FY16 BVPS: 154
As par some analysts, current fair value of ICICI may be around 1.25-.1.50*BVPS= 192-231
As par BG metrics and current market scenario:
Present median valuation of ICICI may be around: 250 (FY:16/TTM)
Projected fair value might be around:255-270-285 (FY:17-19/FWD)
(if EPS grown as par past historical trend, despite present NPL woes; de-leverage and strong balance sheet buffer for loss absorption may help).
| ICICIBANK | EPS(TTM) | BV(Act) | P/E(AVG) | Low | High | Median | 200-DEMA | 10-DEMA |
| Q4FY16/TTM | 16.64 | 154 | 15 | 251.27 | 246.20 | 248.74 | 252.96 | 242.84 |
| FY17/FWD | 17.5 | 170.15 | 15 | 257.69 | 252.48 | 255.08 | 252.96 | 242.84 |
| FY18/FWD | 19.35 | 188.25 | 15 | 270.96 | 265.49 | 268.23 | 252.96 | 242.84 |
| FY19/FWD | 21.45 | 207.85 | 15 | 285.29 | 279.52 | 282.41 | 252.96 | 242.84 |
Analytical Charts:
Q4FY16 Result highlights:
|
Q4FY16 | Q3FY16 | Q2FY16 | Q1FY16 | Q4FY15 | YOY(%) | QOQ *%) | EST | DEV(%) | |
| Interest Earned | 13,481.93 | 13,346.07 | 13,098.87 | 12,812.56 | 12,738.47 | 5.84 | 1.02 | |||
| (a) Int. /Disc. on Adv/Bills | 10,040.51 | 9,862.87 | 9,664.55 | 9,375.22 | 9,333.04 | 7.58 | 1.80 | |||
| (b) Income on Investment | 2,652.35 | 2,652.48 | 2,661.40 | 2,659.12 | 2,983.20 | -11.09 | 0.00 | |||
| (c) Int. on balances With RBI | 59.02 | 36.22 | 31.47 | 31.53 | 38.93 | 51.61 | 62.95 | |||
| (d) Others | 730.05 | 794.5 | 741.45 | 746.69 | 383.3 | 90.46 | -8.11 | |||
| Other Income | 5,108.93 | 4,216.88 | 3,007.35 | 2,989.89 | 3,496.26 | 46.13 | 21.15 | |||
| TOTAL INCOME | 18,590.86 | 17,562.95 | 16,106.22 | 15,802.45 | 16,234.73 | 14.51 | 5.85 | |||
| EXPENDITURE | ||||||||||
| Interest Expended | 8,077.42 | 7,893.11 | 7,847.39 | 7,697.47 | 7,659.05 | 5.46 | 2.34 | |||
| Employees Cost | 1,382.05 | 1,140.43 | 1,212.59 | 1,267.28 | 1,298.80 | 6.41 | 21.19 | |||
| Other Expenses | 2,023.89 | 1,969.61 | 1,887.81 | 1,799.90 | 1,808.59 | 11.90 | 2.76 | |||
| TOTAL EXPENSES | 11,483.36 | 11,003.15 | 10,947.79 | 10,764.65 | 10,766.44 | 6.66 | 4.36 | |||
| EBITDA | 7,107.50 | 6,559.80 | 5,158.43 | 5,037.80 | 5,468.29 | 29.98 | 8.35 | |||
| ONE TIME EXCEPTIONAL INCOME | 2,131.00 | 1,243.00 | 0.00 | 0.00 | 0.00 | 2131.00 | 71.44 | |||
| OPERATING PROFIT(OP) | 4,976.50 | 5,316.80 | 5,158.43 | 5,037.80 | 5,468.29 | -8.99 | -6.40 | |||
| OPM(%) | 26.77 | 30.27 | 32.03 | 31.88 | 33.68 | -20.53 | -11.58 | |||
| Depreciation | 0 | 0 | 0 | 0 | 0 | 0.00 | 0.00 | |||
| EBITA | 7,107.50 | 6,559.80 | 5,158.43 | 5,037.80 | 5,468.29 | 29.98 | 8.35 | |||
| Provisions And Contingencies | -3,326.21 | -2,844.05 | -942.16 | -955.39 | -1,344.73 | 147.35 | 16.95 | |||
| EXCEPTIONAL PROVISIONS | -3,600.00 | 0 | 0 | 0 | 0 | 3600.00 | 3600.00 | |||
| TOTAL PROVISIONS | -6,926.21 | -2,844.05 | -942.16 | -955.39 | -1,344.73 | 415.06 | 143.53 | |||
| PBT | 181.29 | 3,715.75 | 4,216.27 | 4,082.41 | 4,123.56 | -95.60 | -95.12 | |||
| Tax | -520.6 | 697.62 | 1,186.16 | 1,106.25 | 1,201.56 | -143.33 | -174.63 | |||
| PAT | 701.89 | 3,018.13 | 3,030.11 | 2,976.16 | 2,922.00 | -75.98 | -76.74 | 3115.10 | -77.47 | |
| Net Profit/(Loss) For the Period | 701.89 | 3,018.13 | 3,030.11 | 2,976.16 | 2,922.00 | -75.98 | -76.74 | |||
| Equity Share Capital | 1,163.17 | 1,162.65 | 1,161.75 | 1,161.01 | 1,159.66 | 0.30 | 0.04 | |||
| EPS | 1.21 | 5.19 | 5.22 | 5.13 | 5.04 | -76.05 | -76.75 | 5.36 | -77.47 | |
| OPERATING EPS | 8.56 | 9.15 | 8.88 | 8.68 | 9.43 | -9.27 | -6.44 | |||
| Basic EPS | 1.21 | 5.2 | 5.22 | 5.13 | 5.04 | -75.99 | -76.73 | |||
| Diluted EPS | 1.2 | 5.17 | 5.18 | 5.09 | 4.99 | -75.95 | -76.79 | 5.35 | -77.57 | |
| NPA Ratios : | ||||||||||
| Gross NPA | 26,721.00 | 21,356.00 | 16,006.00 | 15,286.00 | 15,242.00 | 75.31 | 25.12 | |||
| GROSS SLIPPAGE | 5,365.00 | 5,350.00 | 720.00 | 44.00 | 2,011.00 | 166.78 | 0.28 | |||
| LESS: CUMULATIVE PROVISIONS | 13,424.00 | 11,342.00 | 9,178.00 | 8,884.00 | 8,917.00 | 50.54 | 18.36 | |||
| Net NPA | 13,297.00 | 10,014.00 | 6,828.00 | 6,402.00 | 6,325.00 | 110.23 | 32.78 | |||
| ADD:NET CDR | 8,573.00 | 11,294.00 | 0.00 | 0.00 | 11,017.00 | -22.18 | -24.09 | |||
| TOTAL NPL | 21,870.00 | 21,308.00 | 6,828.00 | 6,402.00 | 17,342.00 | 26.11 | 2.64 | |||
| ADVANCES | 435,264.00 | 434,800.00 | 409,693.00 | 399,738.00 | 387,522.00 | 12.32 | 0.11 | |||
| NPL(%) | 5.02 | 4.90 | 1.67 | 1.60 | 4.48 | 12.28 | 2.53 | |||
| Gross NPA(%) | 6.14 | 4.91 | 3.91 | 3.82 | 3.93 | 56.08 | 24.99 | |||
| Net NPA(%) | 3.05 | 2.28 | 1.65 | 1.58 | 1.61 | 89.75 | 33.99 | |||
| Return on Assets % | 0.41 | 1.82 | 1.89 | 1.91 | 1.92 | -78.65 | -77.47 | |||
| NII | 5,404.51 | 5,452.96 | 5,251.48 | 5,115.09 | 5,079.42 | 6.40 | -0.89 | 5565.20 | -2.89 | |
| NIM(%) | 3.37 | 3.53 | 3.52 | 3.54 | 3.57 | -5.60 | -4.53 | |||
| PBT(%) | 0.98 | 21.16 | 26.18 | 25.83 | 25.40 | -96.16 | -95.39 | |||
| NP(%) | 3.78 | 17.18 | 18.81 | 18.83 | 18.00 | -79.02 | -78.03 | |||
| OTHER INCOME | 5,108.93 | 4,216.88 | 3,007.35 | 2,989.89 | 3,496.26 | 46.13 | 21.15 | |||
| FEE INCOME | 2212 | 2262 | 2235 | 2110 | 2137 | 3.51 | -2.21 | |||
| DIV/FX INCOME | 707 | 513 | 550 | 673 | 633 | 11.69 | 37.82 | |||
| TREASURY INCOME | 59 | 199 | 222 | 207 | 726 | -91.87 | -70.35 | |||
| SUBSIDIARY STAKE SALE | 2131 | 1243 | 0 | 0 | 0 | 2131.00 | 71.44 | |||
| TOTAL OTHER INCOME | 5109 | 4217 | 3007 | 2990 | 3496 | 46.14 | 21.15 |
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