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Wednesday, December 10, 2008

ICICI Bank - BUY report from BNP Paribas Securities

BNP Paribas Securities has maintained its ‘buy’ rating on ICICI Bank provided with target price .

CMP: Rs 370
Target price: Rs 620

BNP Paribas Securities has maintained its ‘buy’ rating on ICICI Bank on account of bank’s strategy of consciously slowing down on growth in riskier categories.

The brokerage house says, “Our analysis of incremental advances — broken into mortgage, non-collateralised retail and corporate loans — vis-`-vis the incremental gross non-performing loans (NPLs) additions indicates that bank’s strategy of consciously slowing down on growth in riskier categories has started yielding results.”

It expects a slowdown in rate of growth of non-collateralised NPLs over the next two quarters, although in absolute terms, incremental NPLs will continue in the Rs 3-4-billion-per-quarter range as at present. The brokerage says that the bank trades at one time its financial year 2010 (expected) book value at its target price of Rs 620.

We use a three-stage residual income valuation to arrive at our core bank target price of Rs 475 and a sum-of-the-parts approach to arrive at Rs 145 per share for subsidiaries.
Our aggregate target price for ICICI Bank is Rs 620.

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