ICICI Bank - Stock Report With 'Buy Stocks' Recommendation

Angel Broking remains optimistic on ICICI Bank and has recommended to buy stocks of ICICI with a target translating to a good upside.

“We believe that the Bank’s balance sheet transformation, changed business strategy and strong franchise and leadership (Top 3 position) in not just banking, but largely all its major financial services businesses represent substantial value, though it is likely to take a longer period to be unlocked,” said Angel Broking in a report. Being undisputed leader in private bank space, it is one of the best stock to buy from banking sector for investment growth.

According to the brokerage firm, the bank has a sound strategy in place that is being executed decisively and effectively. Centred around maintaining strong capital adequacy in the current environment, while building the necessary base for strong CASA mobilisation going forward through branch expansion without diluting the current focus on stringent cost control measures, the strategy provides a margin of safety in the current environment and should result in an improved balance sheet mix and profitability over the next two years, in time to capitalise on a revival in overall GDP growth.

In the short term, while asset quality deterioration remains a key concern, increased focus on Treasury as a profit centre as well as continued focus on cost controls should provide some support to the bank’s P/L account. At the CMP, the Bank’s core banking business (after adjusting Rs213 per share towards the value of the subsidiaries) is trading at 0.7x FY2010E adjusted book value of Rs331. Including subsidiaries, the stock is trading at 1.0x FY2010E adjusted book value of Rs 434.3.

We maintain a Buy rating on the stock, with a target price of Rs 710, concluded the stock brokerage firm.