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ICICI: Regular performance - Views on News from Equitymaster
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  • Oct 25, 2001

    ICICI: Regular performance

    ICICI maintained its financial performance by reporting a double digit growth in profits even during the downturn in the industrial activity. Its profits excluding accelarated provisions increased by 11%. However, the growth in income from operations came down to a single digit from 13% in 1QFY02.

    (Rs m) 2QFY01 2QFY02 Change 1HFY01 1HFY02 Change
    Income from Operations 21,870 23,370 6.9% 42,860 47,100 9.9%
    Other Income (30) 220 - 350 580 65.7%
    Interest & Depreciation 17,250 18,400 6.7% 33,510 36,760 9.7%
    Operating Profit (EBDIT) 4,620 4,970 7.6% 9,350 10,340 10.6%
    Operating Profit Margin (%) 21.1% 21.3%   0 0 0.6%
    Other Expenses 830 820 -1.2% 1,660 1,600 -3.6%
    Profit before Tax 3,760 4,370 16.2% 8,040 9,320 15.9%
    Provisions and write offs 990 810 -18.2% 2,140 1,900 -11.2%
    Extraordinary item - 1,310   - 1,310  
    Tax 230 740 221.7% 490 1,340 173.5%
    Profit after Tax/(Loss) 2,540 1,510 -40.6% 5,410 4,770 -11.8%
    Net profit margin (%) 11.6% 6.5%   12.6% 10.1%  
    Number of shares (eoy) 785.0 785.0   785.0 785.0  
    Diluted Earnings per share* 12.9 7.7   13.8 12.2  
    P/E (at current price)   6.8     4.6  

    Surprisingly, ICICI's fund based income witnessed an impressive growth of 7% during the quarter, while fee based income grew by just 2%. The institution has however maintained its operating margins at 21.3%.

    During the first half of the year tax provision jumped by 174%, due to additional provision of Rs 600 m on account of deffered taxation as per AS-22. Also, additional Rs 1.3 bn has been provided on account of changes in investment classification and the consequent impact on valuations. Excluding these two items, ICICI's profits have actually risen by about 24%. Also, a reduction in cost to income ratio to 15% in 1HFY02 from 17% in 1HFY01 helped the institution in maintaining its profit growth.

    ICICI restructured assets aggregating Rs 29 bn in the first six months of the current year. Consequently, net non-performing assets stood at Rs 32 bn as on September 30, 2001 (net NPA ratio remained constant at 5.2%). ICICI's NPAs are largely from sectors including steel, textiles and commodity. Companies in these sectors are facing problems due to tough economic environment. This would result in a likely appreciation in ICICI's gross NPAs.

    At the current market price of Rs 56 ICICI is trading at a P/E of 5x and Price/Book value ratio of 0.6x its 2HFY02 annualised earnings. The institution has announced a reverse merger with its banking arm, ICICI Bank.

    ICICI group is holding its analyst meet today. We will post a detailed update on the merger tomorrow, when the information on the group's latest initiatives and future strategy is available.



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