Goldman Sachs and UBS have revised their target price upwards on the shares of ICICI Bank, after the private lender registered an improvement in asset quality. Gross non-performing assets (NPA) as a percentage of gross advances came in at 7.87 percent for the quarter, lower compared with 7.99 percent in previous quarter. Notably, the asset quality for the quarter ended 30th September 2017 was far better than its rivals Axis Bank and Yes Bank.
Goldman Sachs has revised the target price upwards to Rs 355, from Rs 302 earlier, and observed that the asset quality remains steady as RBI audit is under-way. On Friday, after the lender reported its September quarter results, Chanda Kochhar of ICICI Bank said that the bank did not report any divergence on in gross NPAs, as the RBI audit is not yet fully complete. Goldman Sachs says that the fresh slippages in the quarter were 45% below its earlier estimates. Notably, India’s large private banks such as Axis Bank and Yes Bank reported large divergences in gross NPAs to the tune of Rs 5,633 crore and Rs 6,355 crore respectively.
UBS has also revised its target price upwards to Rs 400, on the back of steady operating metrics. UBS observed that the management tone is positive after a long time. ICICI Bank shares were trading at Rs 305.5, up by more than 1.4% on NSE. The research firm’s target price implies an upside of more than 30% from the current market prices. ICICI Bank shares have returned nearly 30% since January, while the Sensex has returned 25% in the same period.
Private sector banks have fallen under the RBI scanner, after the apex banks tightened regulations concerning NPAs earlier this year. HDFC Bank too said the Reserve Bank of India has asked it to classify a contentious loan as a non-performing asset (NPA), which had led to a jump in its provisions in September quarter results declared earlier last week.