InvestorQ : With the ICICI Bank stock getting back into profits, should I be buying the stock right now?
Rutuja Nigam made post

With the ICICI Bank stock getting back into profits, should I be buying the stock right now?

Answer
user profile image
1 year ago


ICICI Bank turned around from a loss to a quarter in the June quarter this year reporting net profits to the tune of Rs.1908 crore on the back of sharply lower provisions and improved asset quality. In the corresponding period last year, the company had reported a loss of Rs.120 crore. Net NPAs fell sharply from 4.19% last year to 1.77% this quarter largely because most of the bad loans are already provided for. The provision coverage ratio also improved substantially from 66% to 83% in the June quarter.

While the Net Interest Income (NII) and advances grew at around 10%, the net interest margins (NIMs) for ICICI Bank remained substantially lower than the other private banks commanding higher valuations in the market. The stock has appreciated nearly 50% in the last one year and valuations are still stretched. Ideally, you should be a little careful as the 50% appreciation in the stock would largely remove the margin of safety on the stock. Buy in small quantities and adopt a phased approach to buying the stock.