ICICI Bank said it will offload 2% stake in its insurance arm ICICI Prudential Life in one or more tranches. This news will let the ICICI Bank stock to trade with positive bias today. The move will bring the promoter holding in the insurer closer to the regulatory limit. The Board of Directors of the bank today approved the sale of up to 2,87,11,100 shares, representing up to 2% of the issued and the paid-up equity share capital of ICICI Prudential Life Insurance Company. Taking into consideration insurer's stock closing price of Rs 410.25 on BSE today, the stake sale is expected to fetch the bank Rs1,178cr. The floor price for the offer for sale has been fixed at Rs390 a share.
ICICI Prudential Life Insurance is a joint venture between ICICI Bank and the US-based Prudential Corporation Holdings. ICICI Bank held 54.88% stake in the JV, Prudential’s stake was at 25.83% as on March 31, 2018.
We forecast advances growth of 18% CAGR over FY18-20E driven by retail & SME segments. Slippages under watchlist to reduce with lending to higher rated companies and upgrades from lumpy steel and infra sectors. Further, bank’s focus on lending to higher rated companies is expected to assuage its NPAs woes. With robust retail advances and lower cost of funds, we see NIMs to increase by 30bps to 3.3% over FY18-20E. We forecast earnings CAGR of 96% over FY18-20E due to improved asset quality and higher PPOP. Hence, we expect RoE and RoA to improve by ~340bps and 30bps to 11.8% and 1.3% respectively by FY20E. The stock trades at ~1.5x on FY20E P/BV. We have positive outlook on the stock.
ICICI Prudential Life Insurance is a joint venture between ICICI Bank and the US-based Prudential Corporation Holdings. ICICI Bank held 54.88% stake in the JV, Prudential’s stake was at 25.83% as on March 31, 2018.
We forecast advances growth of 18% CAGR over FY18-20E driven by retail & SME segments. Slippages under watchlist to reduce with lending to higher rated companies and upgrades from lumpy steel and infra sectors. Further, bank’s focus on lending to higher rated companies is expected to assuage its NPAs woes. With robust retail advances and lower cost of funds, we see NIMs to increase by 30bps to 3.3% over FY18-20E. We forecast earnings CAGR of 96% over FY18-20E due to improved asset quality and higher PPOP. Hence, we expect RoE and RoA to improve by ~340bps and 30bps to 11.8% and 1.3% respectively by FY20E. The stock trades at ~1.5x on FY20E P/BV. We have positive outlook on the stock.
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