- Wealth PMS (50L+)
ICICI Bank’s Q4 results are out. Net profit is 744 cr. versus 1150 cr., a 35% drop, and EPS dropped from 10.27 to 6.68.
The consolidated Annual EPS is 32.07 compared to 32 last year. At the current price of 434, that’s a 13.5 P/E, which one might think is fairly high for a company whose consolidated EPS growth is less than 2% over the last two years (for 2006-07 it was 30.92). And, mind you, it traded in this period at over 1,400.
I’ve had a long period of dissatisfaction with the stock, but it still seems overvalued compared to any of the other banks. Public sector banks trade at about 5 P/E even today, and Axis Bank in the private sector is showing much stronger growth. I think this stock needs to be much lower than it is today, with prices like 200, not 400.
Interestingly, the consolidated Q4 EPS shows a growth – of nearly 20%. This is on the NSE site but not on ICICI’s site, so I’m not yet sure what to make of it. Plus, the transcript of the conf call isn’t up yet – that should bring more details.
Yes, the time is not for fundamental thinking – despite all the negative data out there, markets move up. Short at your own peril. Things can defy logic longer than you and I can stay solvent. The next ride down will be easier, but it isn’t apparent how long it will take to come.