ICICI Bank Shares have corrected almost 35% from it’s peak of 1277 that we saw during the bull run last year. At those levels ICICI Bank was trading close to 29 times FY11 earnings and 23 times FY12 earnings which is a lot. Today this share is available at a price of just 830 rupees, 15 times FY12 earnings estimate. I think ICICI Bank share has corrected a lot and one can think about accumulating this share slowly. I wouldn’t rule out the possibility of further decline in the stock price and thus I suggest to take a buy on declines strategy where you purchase small quantities at every 5% kind of decline in the share. That way you will get a fair price of ICICI in this free fall market where predicting a bottom is extremely difficult.

ICICI Bank is expected to grow close to 25% in FY12 and post an EPS of close to 56. Since we are not expecting another bull run any time soon, I think it would be wise to say that ICICI Bank would trade at a fair valuation than a peak valuation anytime soon. I would personally give a fair value of 1100 to this stock which implies a 20 kind of P/E multiple. Although if markets go up further than fair then ICICI Bank would also go up further from what target Im giving.

If one is interested in the large cap private banking space, I would suggest ICICI Bank because this share trades at a much cheaper valuation than it’s peer stock HDFC and in the long term view, will be giving more returns to a shareholder.

ICICI Bank Share has a target price of 1100.

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