The current market turmoil has taken its toll on ICICI Ltd. & the stock after touching the 52 week low on July 25, 2001, is hovering around the same lower levels. Recent crash of the stock price has more to do with the current market turmoil & rumors of raids by central Bureau of Investigation (CBI) or other agencies on the company than the fundamentals of the company. We had recommended a BUY on the counter on May4, 2001 at Rs81.5. We reiterate our stance again and recommend a BUY on the scrip.

When investor confidence is arguably at its lowest, the least that we can look forward to is dividend yield.

For both FY00 and FY01, the company has paid a dividend of Rs5.5 per share. At current market price of Rs59.95 (July 26,2001) & with Q1 FY02 performance in mind, we can expect a yield of about 9% if this dividend continues.

In view of the current economic slowdown, the first quarter of FY02 was marked by generally lower credit off-take by corporates, and limited project finance opportunities in the absence of new projects. ICICI continued to maintain its growth by leveraging its strong corporate relationships and customized financial solutions. Profit after tax increased 13.3% to Rs3260mn in Q1-2002 from Rs2870mn in the quarter ended June 30, 2000. ICICI's disbursals increased 6% to Rs87410mn in Q1-2002 from Rs82400mn in Q1-2001. Total assets were Rs.747510mn at June 30, 2001, an increase of 14% compared to June 30, 2000

ICICIs valuations are depressed due to its NPA problems. The management’s bold strategy to make accelerated provisions has resulted in sharp reduction of net NPA’s to 5.1% as on June30, 2001 as against 7.6% in March31, 2001. Though profits will be lower in short term, this is a step in right direction and good news for the investing community.

At the current market price, valuations look attractive. De-merger of ICICI with ICICI bank, if & when it happens, would also be a good news to the counter. ICICI’s first quarter performance was commendable considering the sluggish economic growth. The institution is expected to maintain its performance for the full year, which makes it a very attractive BUY. Stay invested.