Here is CLSA Recommendation on ICICI Bank,
We analyse two scenarios to stress-test the impact of higher slippages on ICICI’s profitability, asset quality and valuations. Our base case assumes thatNPL formation will fall in FY17 but we stress-test ICICI for (1) FY17 being a repeat of 2HFY16 and (2) 25% of infra/metal loans slip into NPLs (total slippage of ~40%). In the first scenario, we see earnings risk of +40% (@50% provision) but the bank would deliver core ROE of 9-10%. The second has much higher risks but ROE should normalise thereafter. Moreover, the bank wouldn’tneed any fresh capital (Tier-1 CAR at 12%), and gains from the sale of stakes insubs can boost profit. Even in a stress case, we believe Rs170-190 would be a good entry point. Maintain BUY.
