ICICI Bank share price jumps after strong Q1 results; should you buy or sell stock?

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Published: July 29, 2019 12:59:23 PM

Shares of India's largest private sector lender ICICI Bank jumped on Monday after the firm reported strong Q1 results in the latest quarter. ICICI Bank share price jumped more than 4.6% to hit the day's high at Rs 434.40.

ICICI Bank, ICICI Bank Q1 profit, ICICI Bank gross NPA ratio, CASA deposits, Basel III normsICICI Bank has reported a net profit of Rs 1,908 crore, even as net NPA ratio came in lowest in 18 months.

Shares of India’s largest private sector lender ICICI Bank jumped on Monday after the firm reported strong Q1 results in the latest quarter. ICICI Bank share price jumped more than 4.6% to hit the day’s high at Rs 434.40. The lender has reported a net profit of Rs 1,908 crore, even as net NPA ratio came in lowest in 18 months. The firm had reported a loss of Rs 120 crore in the comparable period last fiscal. Notably, the bank saw a 41.5% year-on-year (y-o-y) fall in provisions to Rs 3,496 crore and a 27% y-o-y rise in net interest income (NII) to Rs 7,737 crore.

Also read: Share Market Today Live: Sensex extends losses, Nifty below 11,200; Tata Motors, VEDL top losers

Taking stock of the reported results, global brokerage firm CLSA said that the net profit was a tad below estimate on the back of higher provisions and tax outgo. The research firm has trimmed earnings forecast, but sees a turnaround ahead and RoE rising to 15-16%. CLSA has a buy rating on the stock with a target price of Rs 530. Another global brokerage firm Jefferies noted that ICICI Bank had a steady Q1 results with core PPoP (Pre-provision Operating Profit) driven by better loan growth and steady margin.

Jefferies said that ICICI Bank’s fee income was impacted by lower mutual fund distribution fee. The research firm expects improvement in core operating profit. “The standalone RoE is likely to be over 16% by FY21,” Jefferies said in a note. Going ahead, Reliance Securities expects ICICI Bank to deliver sustained improvement across operating metrics led by dwindling headwinds on asset quality front and improving balance sheet. “Further, its strong liability franchise with the industry-best CoF adds to our comfort. RoE expansion over the next two fiscals will mainly be driven by margin improvement and decline in credit cost,” Reliance Securities said in a note.  Reliance Securities has a buy rating on ICICI Bank shares with a target price of Rs 500.

(Please consult your financial advisor before taking any investment related decision)

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