X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
S&P votes in favour of ICICI's new initiatives - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Sep 9, 1999

    S&P votes in favour of ICICI's new initiatives

    According to newspaper reports, Standard & Poor's, a leading credit rating agency, has revised its rating outlook on ICICI Ltd. to 'stable' from 'negative'. S & P has also reaffirmed the financial institution's long term rating of 'BB' and short term foreign currency rating of 'B'.

    ICICI is India's second largest financial institution, with a major presence in almost all areas of financial services. The company has an asset base of Rs 585 bn.

    After this revision, ICICI's rating is at par with the sovereign rating and a grade above the ratings assigned to other Indian financial institutions. S & P has outlined various reasons for this upgradation in rating:

    • Steps taken towards universal banking, including retail franchise, that have helped in the diversification of risk
    • A stronger balance sheet (and the adoption of prudential accounting norms)
    • Lesser probability of significant deterioration in the asset quality
    • Leadership position in innovative and infrastructure financing

    The credit rating agency has, however, cautioned against the following:

    • Project finance continued to account for a large chunk of the business
    • A high level of non performing assets by global standards

    The revision in the rating outlook is likely to come as a shot in the arm for ICICI, which has just launched domestic public offering. The financial institution will also be launching an American Depository Receipts (ADRs) issue later in the year.

    ICICI's operations are being constrained by the relatively lower levels of capital that it presently has. Its capital adequacy ratio (CAR), as on 31st March 1999, was at 8.3%, marginally higher than the minimum stipulated 8%. This has added a sense of urgency to the institution's plans to raise capital from domestic and overseas markets. The revision in the rating outlook will certainly improve the prospects of such exercises.

    ICICI has been pursuing aggressively its goal of becoming a 'universal bank'. As a step towards this, the financial institution has acquired domestic retail finance companies, a segment where it did not have a presence till recently, and has also broadened its product portfolio to include loans for durables. ICICI has also been taking measures to rid its books of the high level of gross non-performing loans (FY99 11.4% of total assets). It has adopted the US-GAAP (Generally Accepted Accounting Principles) in order to comply with the global standards.

    The revision in the ratings outlook is a reflection of ICICI's commitment in transforming the development finance institution into a universal bank, having a global presence.

    Market View:

    Analysts have rated the stock as a 'BUY' mainly on account of the improving economic conditions and a recovery in prices of commodities. ICICI has a large amount of non-performing loans on its books, which primarily are owed by companies operating in the commodities markets.

     

     

    Equitymaster requests your view! Post a comment on "S&P votes in favour of ICICI's new initiatives". Click here!

      
     

    More Views on News

    HDFC: Red Flag in Developer Loans (Quarterly Results Update - Detailed)

    Aug 10, 2017

    HDFC starts FY18 on robust loan growth but asset quality slips on increased exposure to developer loans.

    HDFC: Conservative Provisioning tempers down FY17 earnings (Quarterly Results Update - Detailed)

    May 9, 2017

    HDFC ends FY17 on a tepid note as it remains conservative on the asset quality front.

    HDFC: High Provisioning Drags Down Earnings Growth (Quarterly Results Update - Detailed)

    Feb 7, 2017

    HDFC declared its results for the third quarter (3QFY17). The institution has reported 18.4% YoY growth in net interest income while net profits have grown by 11.9% YoY during 3QFY17.

    Shriram Trans Fin: FY17 Ends on a Tepid Note due to Regulatory Headwinds (Quarterly Results Update - Detailed)

    Jun 22, 2017

    Demonetisation led slowdown coupled with shift to stringent bad loan norms keep Shriram Transport Finance on a slow wicket.

    Power Finance Corp: Alignment with RBI Norms Knocks Down FY17 Earnings (Quarterly Results Update - Detailed)

    Jun 14, 2017

    Power Finance Corporation earnings hit by RBI mandated higher provision on state government power generation projects where the recovery continues to be 100%.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    HDFC SHARE PRICE


    Aug 16, 2017 (Close)

    TRACK HDFC

    HDFC - CAPITAL FIRST COMPARISON

    Compare Company With Charts

    COMPARE HDFC WITH

    MARKET STATS