ICICI Bank Ltd (Buy)

Reasons for recommending buy position for ICICI Bank

1. Strongly Recommended by reputed financial analysts

(Image Courtesy – Thomson Reuters Terminal, Finance Lab, IIM Indore)

According to Thomson Reuters, for 28th July 2017, 18 Analysts per level recommended Strong Buy while
19 Analysts recommended Buy for ICICI Bank Ltd Stock.

Looking at the past quarter, ICICI Bank Ltd has been consistently categorized as Strong Buy by an
average of 18 Analysts and Buy by 20 Analysts.
 2. Earnings Quality

According to the StarMine’s Earning Quality Model, ICICI Bank Ltd scores 88 out of possible a 100 in
emerging markets. The industry median in Earning Quality is 52 but while the Model Benchmark is 50.

The earnings quality has also been increasing since 2016.

(Image Courtesy – Thomson Reuters Terminal, Finance Lab, IIM Indore)

3. Economic Condition as compared to other players

While comparing ICICI Bank ltd with other big players in the market like HDFC bank, Axis Bank and SBI, it
seemed that ICICI Bank performed quite decently.

ICICI Bank outperforms Axis Bank and SBI in terms of Return on Equity and Return on Total Asset.
 (Image Courtesy – Thomson Reuters Terminal, Finance Lab, IIM Indore)

Even in the case of Cash flow ratios, ICICI Bank recorded a Dividend/Net Cash Operating as 6.50 as
compared to 3.02 of SBI and 4.48 of Axis Bank

In other Cash Flows ratio like Net Cash Operating/Revenue and Net Cash Operating/Fixed Asset
Purchase, ICICI Bank lags behind HDFC Bank and fares better than SBI and AXIS Bank.

(Image Courtesy – Thomson Reuters Terminal, Finance Lab, IIM Indore)

 4. Forecast and future projections

(Image Courtesy – Thomson Reuters Terminal, Finance Lab, IIM Indore)

It is clear from the above image that revenue for ICICI Bank Ltd is expected to increase steadily.

In case of Net Income, after a decline in for the year 2017, steady increase is expected for the next 3
years.

5. High CASA Ratio

ICICI Bank boasts a healthy CASA ratio of 50.4% which is one the highest across Indian Banking sector.

CASA stands for Current and Savings Account. A higher CASA ratio indicates a lower cost of funds,
because banks do not usually give any interests on current account deposits and the interest on saving
accounts is usually very low 3-4%. A higher CASA ratio is usually seen as a measure of profitability in the
Indian Banking scenario.