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ICICI Bank: A Cheap Play on India

11/26/2015 10:00 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

Top commercial banks in emerging markets have been clobbered this year, observes Mark Skousen, editor of Private Equity Trader.

Our latest featured recommendation, ICICI Bank (IBN), one of India’s largest banks, is down 35%.

The company offers every variety of commercial and investment banking, as well as insurance, through more than 1,700 locations throughout India, China, South Africa, Canada, Singapore, the UK, and the US. 

Operations are state-of-the-art. Customers can choose between physical branches, automated teller machines, telebanking, and Internet banking.

And despite the depressed stock price, business is very good. In the second quarter ended September 30, net profit rose 12% to $462 billion. Revenues jumped 18% to $8.7 billion. 

Profit margins exceed 22% and return on equity tops 15%. Capital ratios remain strong. IBN has a rising dividend policy (1.8% yield).

The stock is cheap, selling for 11 times earnings. Its price/earnings to growth ratio is 0.68 (anything less than 1 is excellent).

Commodity guru Rick Rule’s favorite rule is “Don’t buy what’s hot, but what’s not!” That certainly applies to ICICI Bank. And Ken Fisher, the billionaire money manager, is now recommending this top Indian bank. 

In his recent Forbes column, he wrote, “Like most emerging markets banks, folks fret that a minor upward rate wiggle by the Fed will impale these banks and their countries. ICICI is no different.”

Indeed, Fisher recently increased his position in IBN to 10.3 million shares.  Let’s buy ICICI Bank and set a protective stop of $6 a share.

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