- Wealth PMS (50L+)
ICICI Bank has announced Q3 results. EPS is up 4% on a standalone basis at 11.42 versus 10.99. Earnings Per Share – EPS – is really the only way to compare results, according to me. If a company can’t show growth in its Earnings Per Share, then there is a problem.
Let’s go one step ahead and assume some level of seasonality in ICICI’s results. So a better bet would be to calculate the Trailing Twelve Month (TTM) EPS for each quarter, and the corresponding growth in the TTM EPS (%).
I’ve used data from the ICICI investor site since Q1 FY 2004.
Capital intensive entities like banks cannot be valued at extremely high P/Es – the EPS will not quite grow that fast.
It’s more about what we THINK the bank will do in the future, rather than the trailing EPS. But think about it – did we not “think” the bank will do much better two years ago? In the last two years EPS growth has only dropped – and has been negative too. Going forward, where does this take us? I would expect a further drop in EPS after the India story unwinds, the bad loans finally appear, and credit growth drops alarmingly fast.