Clipped from: https://www.thehindubusinessline.com/todays-paper/icici-bank-buy/article65088640.ece
At 3x FY23 price-to-book, ICICI Bank’s valuations are far from cheap especially seen against its historic average of 1.7x. But past numbers were masked by enormous asset quality issues owing to its legacy corporate book and the bank’s leadership issues. Both are now well sorted. From being known as an aggressive player in the market, ICICI Bank has embarked ona cautiously aggressive growth approach.
Having bettered the Street’s expectation quarter after quarter on NPA front, should the trend continue in FY23 as seen so far in the current fiscal, there is ample room for re-rating in terms of earnings and profitability. Steadily falling share of weak corporate loans, the bank’s efforts to bump up its retail book to over 60 per cent in the last three years and a reasonable chunk of it being padded by secured products augur well from a profitability perspective as well. The retail loan growth may normalise and remain a cash cow for the bank, but the improved corporate portfolio could add to the alpha in terms of growth and earnings.
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