From its recent low of 2,904.44 touched on 28 April, the 30-share BSE Sensitive Index (Sensex) has risen by 23.36% to its 15-month high of 3,583.06 in two months. In the same period, the ICICI Bank stock has risen by only 13.21%, with a major portion of the gain (over 4%) coming only on Friday, to settle at Rs 147.35.

The daily volumes on the counter have ranged between 5-10 lakh shares in the last two months.

While the ICICI Bank stock has under-performed the overall market, it has also grossly under-performed among its own peers, which have been on a dream run recently.

From its 52-week low of Rs 109.25 touched on 13 November 2002, the ICICI Bank stock has gained only 34.87% as compared to a 55.58% rise in the newly-launched BSE Bankex, the index covering 12 bank stocks.

However, banking sector analysts remain bullish on the stock.

The prime reason for the under-performance of the ICICI Bank stock is its historic pricing, which has been 7-9 times its earnings. Dealers said the stock is facing selling pressure at every rise. The stocks of public sector banks, which have risen smartly in the recent past, are still quoting at 4-6 times their FY 2002-03 earnings.

ICICI Bank's latest financial results are quite impressive. For the quarter ended 31 March 2003, it posted 493.7% rise in net profit to Rs 337.68 crore (Rs 56.88 crore) on operating income of Rs 2,843.44 crore (Rs 852.16 crore).

For the year ended 31 March 2003, the bank's net profit stood at Rs 1,206.18 crore (Rs 258.30 crore) on operating income of Rs 12,526.88 crore (Rs 2,726.59 crore). The bank has also declared a dividend of 75% for FY 2002-03. On an equity base of Rs 613.03 crore, the earnings per share (EPS) works out to Rs 19.67.

The current market price of Rs 147.35 discounts the company's FY 2002-03 earnings 7.49 times, which is still higher compared to its peers in the public sector.

As on 31 March 2003, ICICI Bank's net non-performing customer assets (NPAs) were at Rs 3,151 crore, constituting 4.9% of customer assets, while gross NPAs were at Rs 5,900 crore, constituting 8.5% of customer assets. The bank's standard assets include net restructured assets of Rs 8,943 crore.

The bank had a provision coverage of about 62% against NPAs. Its capital adequacy ratio (CAR) was at 11.1% (including Tier-1 capital adequacy of 8.2%), well above the Reserve Bank of India's requirement of 9%.

The bank's focus on the retail sector, where there are very low defaults, is one of the reasons for the upbeat outlook for ICICI Bank.

In FY 2002-03, ICICI Bank achieved market leadership across products in the retail finance segment. The bank made retail loan disbursements of about Rs 20,300 crore, including home loan disbursements of Rs 8,660 crore.

The retail assets increased by over Rs 13,000 crore to Rs 19,132 crore. Retail assets now constitute 18% of total assets and 30% of customer assets, compared to 6% of total assets and 11% of customer assets in March 2002.

Currently, ICICI Bank is one of the frontrunners in the housing finance sector, with a 30% market share. As against the monthly (March 2003) industry volume of Rs 3,500 crore, ICICI Bank's portfolio was at Rs 1,070 crore. In the fiscal ended 31 March 2003, ICICI Bank's housing loan portfolio was at Rs 9,220 crore, reflecting 48.2% of the total retail portfolio of Rs 19,132 crore.

The Securisation Act has come as a big booster for the banking sector. The Act aims at speeding up recovery of sticky assets without additional court procedures. The Act augurs well for the lending business as it will reduce incremental NPAs i.e. wilful defaults by borrowers may come down drastically.

However, a court case is pending as to whether banks would be able to dispose off assets of defaulting borrowers. Pending this clarification, not much recovery is taking place on the corporate recovery front, banking analysts said.

ICICI Bank was transformed into a universal bank with the merger of erstwhile ICICI along with its subsidiaries, ICICI Personal Financial Services and ICICI Capital Services with effect from 30 March 2002.