Reviews

In this edition, we have reviewed CIE Automotive India Limited and ICICI Bank Limited. We suggest our readerinvestors to HOLD CIE Automotive India Limited and ICICI Bank Limited 

We had recommended CIE Automotive India Ltd. in Volume 38, Issue No. 25 dated Nov 6, 2023— Nov 19, 2023, under the ‘Cover Story’ segment. The recommended price for the stock was ₹455. We had recommended the stock based on a healthy operational profile, steady revenue growth momentum and comfortable profitability. Mahindra CIE Automotive is a subsidiary of the CIE Automotive Group of Spain, a global industrial group supplying automotive components and subassemblies. The company focuses on the production and sale of automotive components to original equipment manufacturers. 

It also has other customers in India and overseas. The company has manufacturing facilities in various locations in India and exports products to customers in other countries. In Q4FY24, on a consolidated basis, the company reported growth in net sales of 8.32 per cent to ₹2,426.80 crore. 

Thus, it fared well as compared to ₹2,240.40 crore in the previous quarter of the same year. On a YoY basis, its net sales stood flat. The net profit increased by 29.59 per cent to ₹229.80 crore as compared to ₹177.33 crore in the previous quarter of the same year and on a YoY basis it increased by 4.47 per cent. At TTM, the company’s shares are trading at a PE of 22.6 times, which is equal to its three-year median PE of 22.8 times, whereas the industry PE stands at 28.5 times. 

If we look at its PBV, it is currently at 3.04 times, which is higher than the industry PBV of 3.74 times. The company has a three-year average return on equity (ROE) of 7.06 per cent and a return on capital employed (ROCE) of 14.6 per cent. CAIL, a leading automotive component supplier, benefits from CIE’s operational and managerial support and synergies from its global operations. With a diversified automotive footprint across multiple geographies and product segments, CAIL has access to operational and technological support. 

CAIL’s large scale of operations and healthy operational profile, including steady revenue growth momentum and profitability, help maintain client retention and acquire new customers. Its leverage and coverage indicators remain comfortable, with expected annual cash accruals of over ₹800 crore. The company’s dependence on external borrowings is expected to remain minimal over the near to medium term. Hence, we recommend HOLD. 

We had recommended ICICI Bank Ltd. in Volume 38, Issue No. 25 dated Nov 6, 2023— Nov 19, 2023, under the ‘Cover Story’ segment. The recommended price for the stock was ₹914.40. We had recommended the stock based on its improving status of non-performing assets (NPAs), focus on SME lending and good return on assets. ICICI Bank is a leading private sector bank in India, established in 1955 by the World Bank, the Government of India and Indian industry representatives. Initially focused on project finance, ICICI Bank transformed its business in the 1990s to offer a diversified range of financial services. 

With an extensive network of branches, ATMs and digital channels, it offers deposit, credit and other financial products to individuals, households and small businesses across India. It also offers select products to non-resident Indians and local market offerings in select international geographies. ICICI Bank leverages its international presence to meet crossborder client requirements. In Q4FY24, on a consolidated basis, the bank reported growth in the total income of 12.95 per cent to ₹67,181.70 crore as compared to ₹59,479.76 crore in the previous quarter of the same year. 

On a YoY basis, its total income increased by 24.59 per cent. The net profit increased by 6.38 per cent to ₹11,972.73 crore as compared to ₹11,255.19 crore in the previous quarter of the same year and on a YoY basis it increased by 19.90 per cent. The interest earned increased by 4.26 per cent to ₹42,606.72 crore as compared to ₹40,865.23 crore in the previous quarter of the same year. On a YoY basis, it increased by 23.72 per cent. At TTM, ICICI Bank is trading at a PB of 3.63 times which is higher than its industry PB of 1.76 times. The bank has maintained a ROA of 2.35. The bank has a three-year compounded sales and profit growth of 21 per cent and 34 per cent, respectively. 

ICICI Bank’s total and term deposits increased by 19.6 per cent YoY and 6 per cent QoQ as of March 31, 2024. The average current account deposits increased by 13 per cent YoY and 4.6 per cent QoQ, while the average savings account deposits increased by 4.6 per cent YoY and 2.2 per cent QoQ. Its domestic and retail loans also increased, with business banking, SME and corporate portfolios on the rise. The net NPA ratio declined to 0.42 per cent from 0.44 per cent in December 2023. ICICI Bank’s retail banking segment will benefit from expectations of a boost in loan demand across various sectors. Digital banking solutions will drive customer convenience and fee income. Hence, we recommend HOLD.