ICICI Bank share price jumped 1 per cent on Monday to touch intraday high of Rs 761.5 on the Bombay Stock Exchange (BSE) after the private lender reported a 59% on-year jump in net profit to Rs 7,019 crore for the quarter ending March. In the past one year, ICICI Bank shares have rallied 28%. Brokerages remain bullish on the stock and see up to 43% upside going forward on account of positive asset quality outlook. “We expect return ratios to remain strong given the bank’s digital push, which will keep opex in check; high PCR, which will provide comfort on the credit cost front; and consistent mid-to-high teens credit growth,” said brokerage firm Edelweiss Securities in its Wealth Research report.
Stock talk: Should you buy, hold or sell?
Target price: Rs 945
ICICI Bank’s Q4FY22 results were broadly in line with Edelweiss’ revenue and balance sheet growth projections. However, lower-than-expected credit cost resulted in a significant PAT beat. Excluding dividend income from subsidiaries and associates, core operating profit of the bank was up 21% on-year. Although the slippage ratio remained unchanged on-quarter, robust recoveries led to improvement in asset quality, with GNPA improving to 3.6% vs. 4.1% in Q3FY22. “Growth leadership, strong digital push, and focus on risk-calibrated operating returns and best-in-class provision coverage should lead to a re-rating for the bank. We maintain our ‘BUY’ recommendation with a target price of Rs 945 per share, implying a 26% upside,” said analysts at Edelweiss.
Kotak Securities: Buy
Fair Value: Rs 975
After ICICI Bank delivered an exceptionally strong performance with 60% on-year earnings growth led by around 20% on-year operating profit growth, ICICI Bank stock remains Kotak Securities’ top pick. “It is one of the few large banks with a simple thesis ahead with no merger headwinds. We maintain BUY with FV at Rs 975,” the brokerage said. According to the analysts the progress made thus far has been good and the bank is in a strong position to compound its earnings. The brokerage expects consistent returns and lower shocks to earnings to result in the bank taking the leadership position among the large banks. “The extent of differentiation in return ratios or growth is not that high but we believe that the scope for earnings upgrades would be higher in ICICI Bank over HDFC Bank,” said analysts.
Motilal Oswal: Buy
Target price: Rs 1,050
Motilal Oswal said in its report, “the bank is firing on all cylinders with a stable mix of a high-yielding portfolio (retail/business banking) and a low-cost liability franchise which is fuelling steady NII growth.” The brokerage firm sees the bank continuing to clock strong recovery in business trends across key segments of retail, SME and BB while at the same time control on slippages will further help improve cost of funding. “PCR remains one of the best in the industry at 79 per cent and the additional COVID-19 provision buffer (90 basis points of loans) renders comfort,” it added. It expects the bank to deliver a RoA of 1.9 per cent and a RoE of 16.3 per cent in FY24 and maintains a ‘buy’ rating with a target price of Rs 1,050 per share, implying an upside of 40 percent.
Prabhudas Liladher: Buy
Target price: Rs 950
According to analysts at Prabhudas Liladher, ICICI Bank has consistently outperformed over the past few quarters with earnings quality improving each quarter. The brokerage firm envisages an RoE of 15.6 per cent in FY24 as compared to 16.8 per cent for HDFC Bank. “Valuation at 2.2x FY24 core ABV is attractive and assigning a 3.0x multiple, we revise SOTP based target price to Rs 950 from Rs 906 per share,” Prabhudas Lilladher said. The brokerage reiterates a ‘buy’ rating on the stock.
Meanwhile, Emkay Research also maintains a ‘buy’ call on ICICI Bank stock with a target price of Rs 1,025 per share, implying a 37 percent upside. Brokerage firm Nirmal Bang expects credit costs to continue to trend down on account of the positive asset quality outlook. It has raised earnings estimates by 3 per cent and maintains a ‘buy’ call on the stock with target price of Rs 1,068.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)