ICICI Bank Q4FY22/FY22 results & share analysis (long term)
HDFC Bank has been reigning king of the Indian banking industry for last 20 years. Darling of investors.
We have a challenger in ICICI Bank! How?
A Thread 🧵👇
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HDFC Bank has been reigning king of the Indian banking industry for last 20 years. Darling of investors.
We have a challenger in ICICI Bank! How?
A Thread 🧵👇
If you like the analysis, please retweet for support🙏
1/ ICICI Bank Q4FY22/FY22 results analysis [refer pic for numbers]
(a) Revenue growth has been slow – 7% on YoY basis or 12% on QoQ basis
(a) Revenue growth has been slow – 7% on YoY basis or 12% on QoQ basis
![1/ ICICI Bank Q4FY22/FY22 results analysis [refer pic for numbers]
(a) Revenue growth has been slow...](https://pbs.twimg.com/media/FRKNR_ZVIAEDHRB.jpg)
2/ (b) Net Interest has accelerated by 17% in FY22 vs FY21 driven by higher Net Interest Margin (3.96% vs 3.69%) or lower cost of deposits (3.53% vs 4.125)
3/ (c) Net profit growth of ~37% in FY22 on YoY basis which was also aided by lower NPA (implies improving asset quality)
(d) ROE increased from 13% to 15% - a big positive
(d) ROE increased from 13% to 15% - a big positive
4/ ICICI Bank share analysis
If you have watched the cult movie Jo Jeeta Wahi Sikandar and have been following the Banking industry in the past few years, you can’t help but notice a few parallels here btw the showdown of the top 2 in the banking and the movie’s final race.
If you have watched the cult movie Jo Jeeta Wahi Sikandar and have been following the Banking industry in the past few years, you can’t help but notice a few parallels here btw the showdown of the top 2 in the banking and the movie’s final race.
5/ Although we can say that there isn’t any end to the race in the banking industry or any other industry in general, it is safe to say that the top 2 contenders have pulled way ahead of the rest of the industry.
6/ Shekhar (HDFC Bank) is still firmly in the lead, but Sanjay (ICICI Bank) is slowly inching closer in a bid to overtake the leader. Will Sanjay come to level with Shekhar is uncertain, but, surely, the race is now becoming closer than ever before.
7/ The Banking industry in India, especially the private sector has grown mainly on the back of the trust, service quality, and operational efficiency demonstrated by these private players over the dominant public sector banks.
8/ But now the same factors as operational efficiency, good underwriting, and trust have become the norm (hygiene factor) in the banking sector and are no longer the differentiating factor.
9/ The new edge that will dictate the race now is technology, ease of usage, and superior app & platform experience.
10/ And technology is what ICICI Bank is counting on to be able to match and overtake the market leader HDFC Bank.
11/ ICICI Bank has been a pioneer in the Indian Banking Industry for a long time. It has not only been involved in the creation of many historic institutions like NSE, CRISIL, & CIBIL, it has also been the trailblazer in the technology services introduced in the banking industry.
12/ ICICI Bank was the first in India to introduce a mobile banking app way back in 2008 and has even adapted its mobile app iMobile Pay to become India’s 1st universal banking app which provides payment and banking solutions to customers of any bank present in India.
13/ The biggest edge for ICICI Bank is its focus and expertise in banking technology. Their iMobile Pay app has seen over 5.3 million activations from non-ICICI customers which stands as a testament to their innovative capabilities in the retail banking and technology space.
14/ View on Valuation
ICICI bank currently trades at a P/E of 21x vs 20x of HDFC Bank, 12x of SBI, 32x of Kotak Mahindra Bank and 19x of Axis Bank.
ICICI bank currently trades at a P/E of 21x vs 20x of HDFC Bank, 12x of SBI, 32x of Kotak Mahindra Bank and 19x of Axis Bank.
15/ In terms of Price to Book value, ICICI Bank is trading at close to 3.3x times vs. 3.6x of HDFC Bank, 1.6x of SBI, 4x of Kotak Mahindra Bank, and 2.3x of Axis Bank.
16/ The Bank has gone through numerous changes since the appointment of the current CEO Sandeep Bakshi after the high-profile sacking of Chanda Kocchar.
17/ Sandeep Bakshi has cleaned up the bank’s balance sheet and has seen profit growth outpace revenue growth with CAGRs of 81% and 10% respectively over last 3 years.
18/ This has also seen the RoE rise to 15% currently which is higher than Kotak Mahindra Bank’s current RoE (13%) and has significantly reduced the gap with HDFC Bank to 3% from the 8-9% seen earlier.
Detailed share analysis article - socinvest.app
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