ICICI Bank - bank on non-banking; visit note; upgrade to Buy - Edel

Subject: ICICI Bank - bank on non-banking; visit note; upgrade to Buy

 

ICICI Bank (ICICIBC IN, INR 1,310, upgrade to Buy)

 

ICICI Bank recently held an analyst meet to discuss its non-banking business in detail. Key takeaways of the meeting are:

 

w        Aggressive expansion plans for brokerage and distribution businesses housed in I-Sec.

w        Value of brokerage business to be higher than earlier; adding offline services to the existing online brokerage business.

w        Venture capital funds: AUMs to grow to USD 10 bn in two years.

w        AMC has USD 15 bn AUM, of which USD 2 bn is offshore, which will grow at faster rate than domestic AUM. AMC business may get re-rated after UTI AMC IPO.

w        General insurance returning 23-24% RoE (on economic profit basis); strong 30% plus growth expected in the business.

 

We are revising our valuation estimates of brokerage, venture capital, and AMC businesses upwards to arrive at fair value of INR 1,392 for FY09E and INR 1,602 for FY10E. After considering value of its investments, the stock is trading at 2.1x FY09E book and 1.6x FY10E book. We are upgrading the stock from 'ACCUMULATE' to 'BUY'.