ICICI's profits hit by low other income - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

ICICI's profits hit by low other income

Oct 23, 2000

ICICI's net profits for the 2QFY01 declined by 9% due to a substantial drop in other income. The decline in other income was due to a capital loss of Rs 19 m ( capital gain of Rs 75 m in 2QFY00) and lower dividend income from ICICI Securities Ltd.

(Rs m)2QFY002QFY01Change
Income from Operations 19,170 21,810 13.8%
Other Income 1,380 60 -95.7%
Interest & Depreciation 15,820 17,140 8.3%
Operating Profit (EBDIT) 3,350 4,670 39.4%
Operating Profit Margin (%)17.5%21.4%
Other Expenses 620 970 56.5%
Provisions & write-offs 1,010 990 -2.0%
Profit before Tax 3,100 2,770 -10.6%
Tax 320 230 -28.1%
Profit after Tax/(Loss) 2,780 2,540 -8.6%
Net profit margin (%)14.5%11.6%
Diluted number of shares 785 785
Diluted Earnings per share* 14.2 12.9
P/E (at current price) 5.3 5.8

ICICI's approvals and disbursements during the half year ended September 2000 registered a growth of 31.5% and 51.7% respectively. ICICI's healthy capital adequacy ratio of 16.9% will enable it to grow its assets base further. The institution has restructured its loan portfolio during the year. Accordingly disbursements to manufacturing sector declined to 11% of total loans (14% in 1HFY00) and corporate finance increased to 73% (71% in 1HFY00).

The institution has also increased its retail thrust with 87 fully operational ICICI centres, covering 75 cities. It now offers automobile finance loans, home loans, consumer durable loans, personal loans and credit cards. In an endeavour to consolidate its position as a one stop financial services provider, ICICI has recently tied up with Prudential of the UK for life insurance products and Lombard of Canada for non-life insurance products.

ICICI's lower market valuations are due to its higher non performing assets. Although its net NPA ratio as on September 2000 declined to 7.3% (from 7.6% in March 2000), it is higher compared to HDFC's 0.9%. Textile, manmade fibres and steel industry contributes highest to total NPAs.

At the current market price of Rs 74, ICICI trades at a P/E multiple of 6 times its 2QFY01 annualised earnings and 4 times its FY01 projected earnings. We have projected 15% earnings growth and 22% operating income growth in the current year. However, the growth rate is expected to slow down due to low other income and higher provision on substandard assets (according to revised RBI guidelines substandard assets are to be classified as doubtful assets after 18 months of an assets being classified as NPA instead of 24 months earlier).

Equitymaster requests your view! Post a comment on "ICICI's profits hit by low other income". Click here!


More Views on News

The Affordable Housing Boom Could Boost these 5 Stocks for Years to Come... (Views On News)

Oct 20, 2021

With record low interest rates and numerous discounts and schemes by real estate companies, the affordable housing boom is here to stay.

6 Debt Free Penny Stocks with Solid Growth (Views On News)

Oct 2, 2021

Penny stocks which have a decent balance sheet, low or zero debt and a track record for paying consistent dividend fare much better against their peers.

3 Stocks Riding the Fintech Megatrend in India (Views On News)

Sep 29, 2021

India's fintech industry, valued at US$31 bn, is projected to grow to US$84 bn by 2025.

HDFC Shares Rise as Loan Disbursements Jump 181% (Views On News)

Aug 2, 2021

The company witnessed a growth in both the affordable housing and premium segment as lockdown restrictions eased.

Bajaj Finance Stock Springs a Surprise. Gains 5% Despite Disappointing Results (Views On News)

Jul 22, 2021

Bajaj Finance's Q1 performance was muted because of lockdowns but the company has made higher provisions.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms