ICICI Bank - India's best positioned bank

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For years, ICICI was easily the most aggressive bank in India. And today it is paying the price for that aggression, as its NPA levels have hurt valuations in a big way. Compared to a player like HDFC, ICICI has less than HALF the valuation of HDFC, despite having bigger operations!

But all that aggression did not just happen in terms of retail and corporate loans. That aggression also manifested itself in multiple other areas. And today ICICI is positioned to reap a rich harvest from many of those areas.

The ICICI Prudential Life Insurance is slated to open on the 19th of September. And this will obviously be a huge thing. ICICI's residual stake in IPru Life, will be over Rs 25,000 crore, even at the bottom of the band. The money they get from selling the 12% stake will go a long way in easing their NPA issues.

And it is not just IPru Life. There is IPru Asset Management, ICICI Lombard, and many other subsidiaries of ICICI where they are the leading private sector players in their respective fields. At some point or the other, these will all get monetized. You can be sure that IPru is just the first on the list.

But even more than this, ICICI is the first player in the world to recognize the importance of social banking. ICICI Pockets was the first ever banking product launched on Facebook globally. And it still is unique in that space. B2B Branch free banking is also a unique initiative from ICICI which was crippled because of the KYC Paper work needed, and the physical presence that KYC required. But with eKYC becoming the new norm, B2B is poised to become the low cost banking channel of the future. Even in terms of payments, ICICI eToll solution for Toll payment in highways was the first in India, launched almost a year back. Its only now that a few other banks are getting their act together in this space.

The FinTech revolution is going to impact banks around the world in dramatic ways, and ICICI is well positioned to adapt to the new world. There are many who look at the cutting edge of FinTech as just blockchain, distributed ledgers, etc. But FinTech is about a lot more than that - and there are huge areas that are ripe for exploitation today. ICICI is doing a great job in being a first mover in those areas.

The aggression that's there in the ICICI DNA has helped it position itself in a sweet spot for the future. And I must say, it may even save ICICI some blushes in the lending space!

Skate to where the puck will be - not where the puck was. And ICICI very much is skating to where the puck will be.

 

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Target 300! Up 10% in next 10 days! If you miss out on this, you will really kick yourself!

- The stock is trading at 15x past earnings.
- IPru Life valued at Rs 50,000 crore at the lowest.
- ICICI's IPru stake alone worth over Rs 30,000 crore - 20% of market cap.
- ICICI gets Rs 6000 crore cash.
- The cash will obviously help lower NPA burden significantly.
- Imagine impact on profitability when NPA burden is lowered.

This is obviously not priced into the markets!

 

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HDFC Bank at 25x times earnings or ICICI at 15x earnings, that is the question!

HDFC Bank at Rs 330K Crores or ICICI at Rs 160K crores, that is the question!

Are ICICI's problems impossible to fix? Will getting chunky amounts of money from IPru Life, etc, not help ICICI solve its problems? That is the question!

This is easily the best positioned bank in India. They have invested in the right areas for the future. They have worked to clean up the mess from the past.

 

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25% of the IPO has already been snapped up by anchor investors at the top of the range. And pretty much every broker has recommended this IPO!

This is the ONLY opportunity to invest in the insurance space in India. So there will be some scarcity premium.

This IPO is expected to do well - obviously being a large IPO, you cannot expect a very large pop, etc. But still, it should do decently well. Involvement of players like Goldman Sachs, etc as anchor investors indicates that.

But irrespective of how the IPO does - one can be sure the ICICI Bank stock will have a nice rerating! That is the easier game to play today. Don't have to worry about how much allocation you will get, etc.

 

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Powerhouse finish to ICICI Pru IPO - 10+ times oversubscribed!

Last 2 days sellers in Grey market were pushing stock down, I think they must be quite surprised with the sudden surge in demand for the stock.

Also hearing that most people looking at this as a portfolio investment - not a flip on listing trade - might not be much stock available for sale on listing day. As it is, being the ONLY listed Indian insurer, there is serious scarcity value.

Grey market currently looking at 400+ listing - valuing this company at almost Rs 60,000 crores.

With 55% of the company, ICICI's IPru stake itself is over Rs 30,000 crore. Plus Rs 6000 crores cash on hand!

Not bad at all for a company with market cap of Rs 155,000 crore, and quoting at 15x earnings.

 

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Very funny analysis from Prakash Gaba about ICICI Bank - thought you guys would enjoy it.

"Prakash Gaba of prakashgaba.com told CNBC-TV18, "I would look at ICICI Bank. That is looking weak to me. When I look at the chart, it tells me I am going down. It has got tired in the upper regions and that is all it is. Short if you get rallies and short maybe if you can see a level closer to Rs 255, stop loss Rs 270."

I wonder if the Chart also shows him that the Company has just earned Rs 6000 crores from ICICI Pru IPO, and the IPO will list in next 2 days, and is expected to do well as a long term investment. That this Rs 6000 crores will be very useful in making provisions to offset a lot of NPAs.

http://www.moneycontrol.com/news/st...kash-gaba_7517781.html?utm_source=ref_article

 

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Pru IPO priced at top of the band - Rs 334/share. ICICI gets almost Rs 6000 crores. Will boost Q2 profits, and will allow greater provisions to be made for NPAs.

Also, previously, IPru was on the books at Rs 260/share based on last transaction with Temasek and Premji Invest. This transaction at Rs 334 will upgrade book value of this holding in big way. That adds almost Rs 7000 crores to book value, which increases book value per share from Rs 145 per share to Rs 157 per share.

By all metrics, this should be a good boost to the financials.