Edelweiss reiterates 'strong buy' on ICICI Bank
Broking house Edelweiss Securities has reiterated a ‘strong buy’ on the stock saying it has corrected 26% vs 18% for Bankex and the general market correction of 16%.
By ET Bureau |
ICICI Bank
Cmp: Rs 447.10
Target price: 779
Broking house Edelweiss Securities has reiterated a ���strong buy��� on the stock saying it has corrected 26% vs 18% for Bankex and the general market correction of 16%. ���Current prices seem to be completely ignoring value of subsidiary and moreover implying wild assumptions about asset quality (which appears highly improbable),��� said Edelweiss in a note to its clients.
���Even if we make a worse case assumption on all the various possible parameters (none of which is probable), the stock offers substantial value at these levels,��� the note said. The broking house asserts that book value (BV) of Rs 417 does not take into account any valuations for the subsidiaries. ���If we add subsidiary valuations (of Rs 220 per share in FY09E) to the adjusted BV, the fair value will be 50-75% higher than the current price.
This represents a strong return to investors in the short-term itself,��� the Edelweiss note said. The broking outfit expects the bank to post 15%+ CAGR in assets with a buoyant corporate investment pipeline and robust retail asset growth. However, says Edelweiss, main risks for ICICI is NPA (non-performing asset) risk due to its low cumulative provisions. ���With 65% of retail asset book, it is vulnerable to system-wide deterioration in the quality of retail assets,��� said the note.
Cmp: Rs 447.10
Target price: 779
Broking house Edelweiss Securities has reiterated a ���strong buy��� on the stock saying it has corrected 26% vs 18% for Bankex and the general market correction of 16%. ���Current prices seem to be completely ignoring value of subsidiary and moreover implying wild assumptions about asset quality (which appears highly improbable),��� said Edelweiss in a note to its clients.
���Even if we make a worse case assumption on all the various possible parameters (none of which is probable), the stock offers substantial value at these levels,��� the note said. The broking house asserts that book value (BV) of Rs 417 does not take into account any valuations for the subsidiaries. ���If we add subsidiary valuations (of Rs 220 per share in FY09E) to the adjusted BV, the fair value will be 50-75% higher than the current price.
This represents a strong return to investors in the short-term itself,��� the Edelweiss note said. The broking outfit expects the bank to post 15%+ CAGR in assets with a buoyant corporate investment pipeline and robust retail asset growth. However, says Edelweiss, main risks for ICICI is NPA (non-performing asset) risk due to its low cumulative provisions. ���With 65% of retail asset book, it is vulnerable to system-wide deterioration in the quality of retail assets,��� said the note.
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