Friday, 12 April 2013

Incredible Stocks - ICICI Bank

ICICI bank is a well known bank and is presently the second largest bank in India. It has more than 3000 branches in the country and more than 10500 ATMs. This is one of the biggest private sector banks in India and has a very good penetration level at par or even better than some PSU banks.

ICICI bank is constantly increasing its branches and business size, signalling that the potential is still there in the economy and banking sector needs to play a role. As India aims for full financial inclusion, a bank with a strong footing like ICICI bank will only benefit as economic expansion in terms of GDP is only going to justify the large size of the bank. Also, the bank will need to keep up its growth even more to fund the future economic growth of the country. 

The financial figures of the past few years only go to reinforce our view of the bank.

2013 2012 2011 2010 2009 CAGR%
Net Interest Income 22100 10734 9017 8112 8365 27.49
Net Profit 8325 6456 5151 4025 3758 22.00
Net Interest Margin% 3.11 2.73 2.64 2.5 2.4
ROE% 12.48 11.9 9.6 7.9 7.7
Balance Sheet size 536795 473600 406200 363400 379300 9.07
Shareholder Equity 66706 60405 55090 51618 49883 7.54

The detailed annual report will have more information.

Gross NPA was 3.22% as on Mar '13 and 3.62% as on Mar '12. It was 4.47% as on Mar '11. Clearly there is a reduction in the gross NPA.
The net NPA as on Mar '13 is 0.77%
CASA Ratio is 42%

The provisioning coverage ratio is 80.4% as on March 2012 towards their total gross NPA.
Advances have grown from 17.3% from March'11 to March'12.
Average interest earning assets have grown 15% from FY 2010-2011 to 2011-2012.
March 2013 figures will be updated as and when available.

During the last 3yrs the Net Profit has grown at a CAGR of 27.13%.

CMP at the time of post was Rs.1044.95

The past couple of years have been a tough time with high inflation rates and high interest rate scenario. Still, the bank managed to keep the gross NPA in the decreasing trend.

As a smart investor looking for good stocks to invest, it is only prudent to invest in a bank like ICICI bank. However, to get the full potential of the returns from such a stock, it is necessary to pick the stock at the right price and hold for a long duration.