BSE Index Analysis, Securties , Standard Experts
While we expect insulin sales to continue to trend higher, licensing fee is likely to fall significantly post conclusion of Pfizer deal in March 2012.
Management upbeat:
Margin improvement was led by higher yield on assets. NIM improvement was witnessed in both domestic (up 33 bps QoQ to 3.31%) and international (up 12 bps QoQ to 1.52%) business. Higher asset yields were due to (1) complete transmission of base rate hikes done in the previous quarters, (2) higher yields on SLR investment portfolio, and (3) near zero securitization losses. For FY13, management has guided for 10-15 bps improvement in NIM over FY12.
Higher treasury and dividend income: Treasury gains of Rs 1.6 bn (loss of Rs 1.7 bn in 9MFY12) were led by gains in equity portfolio and proprietary trading.
Muted sequential business growth: Decline in deposits (down 2% QoQ) led to flat sequential growth in total business. Advances, however increased by 3% QoQ led by vehicle (up 20% QoQ), housing (up 5% QoQ), and SME loans (up 16% QoQ).
Corporate book declines; However, management positive for future: Domestic corporate book, which had been showing traction in growth over last few quarter, witnessed 10% sequential decline as a result of slowdown in new project activity. However, for FY13, the management is confident of achieving 20% overall domestic loan growth led by retail assets, working capital loans and disbursements out of past project sanctions.
CASA ratio stable despite CA decline:
ICICI Bank has been able to deliver profitable growth along with improvement in asset quality for over last few quarters. Going forward, we believe margin will be supported by its strong CASA franchise (43.5%) and improved retail portfolio (36% loan share). We have revised upwards our earning estimates by 5% for FY13 and 2% for FY14 to factor in higher margin and non-interest income. Maintain BUY with TP of Rs 1,170 [1.8 x FY14E ABV (adj for investments) + Rs 290 value of investments] upside of 34% from CMP of Rs 870.
Biocon: Q4 beats on higher insulin sales, licence fee
Key Q4 highlights: Revenue grew 30% YoY (our estimate 12% YoY) driven by insulin and immunosuppressant (~15% each of revenue), Fidoxamicin supplies, research services (20% of revenue) and licensing fee (Rs 463 mn vs. our estimate of Rs 240 mn.
Key Q4 highlights: Revenue grew 30% YoY (our estimate 12% YoY) driven by insulin and immunosuppressant (~15% each of revenue), Fidoxamicin supplies, research services (20% of revenue) and licensing fee (Rs 463 mn vs. our estimate of Rs 240 mn.
While we expect insulin sales to continue to trend higher, licensing fee is likely to fall significantly post conclusion of Pfizer deal in March 2012.
Management upbeat:
Revenue growth to be driven by insulin, a new immunosuppressant under development, and continued traction in Fidoxamicin supplies. Management indicated research services are seeing good order inflow (improving CRAMS scenario) and sustained profitability.
Management indicated statin business is stable and would deliver decent growth in FY13 (based on existing order book). Likely launch of atorva in US (May Ⱳ) by partners would support statin revenue.
Management indicated company is scouting for licensing partner for oral insulin. Though the opportunity is huge, it would be back-ended (higher value to be captured in milestones and royalties vs. upfront payment).
Valuation
Management indicated statin business is stable and would deliver decent growth in FY13 (based on existing order book). Likely launch of atorva in US (May Ⱳ) by partners would support statin revenue.
Management indicated company is scouting for licensing partner for oral insulin. Though the opportunity is huge, it would be back-ended (higher value to be captured in milestones and royalties vs. upfront payment).
Valuation
With greater clarity on business post Q4FY12 concall, we recommend BUY with TP of Rs 314 (14x FY14E EPS of Rs 22).
ICICI Bank: PAT Beats, Margin Surprises ICICI Bank of Rs 19 bn was ahead of our estimate of Rs 17 bn led by positive margin surprise and higher than expected non-interest income.
Key business highlights:
Key business highlights:
Margin improvement was led by higher yield on assets. NIM improvement was witnessed in both domestic (up 33 bps QoQ to 3.31%) and international (up 12 bps QoQ to 1.52%) business. Higher asset yields were due to (1) complete transmission of base rate hikes done in the previous quarters, (2) higher yields on SLR investment portfolio, and (3) near zero securitization losses. For FY13, management has guided for 10-15 bps improvement in NIM over FY12.
Higher treasury and dividend income: Treasury gains of Rs 1.6 bn (loss of Rs 1.7 bn in 9MFY12) were led by gains in equity portfolio and proprietary trading.
Muted sequential business growth: Decline in deposits (down 2% QoQ) led to flat sequential growth in total business. Advances, however increased by 3% QoQ led by vehicle (up 20% QoQ), housing (up 5% QoQ), and SME loans (up 16% QoQ).
Corporate book declines; However, management positive for future: Domestic corporate book, which had been showing traction in growth over last few quarter, witnessed 10% sequential decline as a result of slowdown in new project activity. However, for FY13, the management is confident of achieving 20% overall domestic loan growth led by retail assets, working capital loans and disbursements out of past project sanctions.
CASA ratio stable despite CA decline:
CASA ratio remained sequentially stable at 43.5% despite decline in current account (CA) balances (down 13% QoQ).
Stable asset quality:
Stable asset quality:
Asset quality continued to improve with gross and net NPA ratios declining by 20 bps and 10 bps QoQ respectively.
Valuation and Outlook
Valuation and Outlook
ICICI Bank has been able to deliver profitable growth along with improvement in asset quality for over last few quarters. Going forward, we believe margin will be supported by its strong CASA franchise (43.5%) and improved retail portfolio (36% loan share). We have revised upwards our earning estimates by 5% for FY13 and 2% for FY14 to factor in higher margin and non-interest income. Maintain BUY with TP of Rs 1,170 [1.8 x FY14E ABV (adj for investments) + Rs 290 value of investments] upside of 34% from CMP of Rs 870.
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