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ICICI Bank shares outperform Nifty50, rally 22% so far in 2022; should you buy, hold or sell?

After ICICI Bank’s analyst day, which focussed on strategic initiatives & priorities and digitisation & network expansion along with SME, supply chain financing, ecosystem banking & retail as focus segments, international and domestic brokerages reiterated their bullish stance on ICICI Bank shares.

ICICI Bank shares outperform Nifty50, rally 22% so far in 2022; should you buy, hold or sell?
ICICI Bank shares have been trading around the record high level of Rs 958 (Image: Reuters)

ICICI Bank shares have been trading around the record high level of Rs 958. The stock has rallied over 20 per cent so far this year, and the bullish momentum is expected to continue, according to analysts. Several brokerages are bullish on the large private lender and have strong ‘Buy’ recommendations for the stock. After ICICI Bank’s analyst day, which focussed on strategic initiatives & priorities and digitisation & network expansion along with SME, supply chain financing, ecosystem banking & retail as focus segments, international and domestic brokerages reiterated their bullish stance on the lender. ICICI Bank remains among the top picks of many as analysts believe that the lender is well-placed and will sustain its best-in-class profitability.

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Should you buy, hold or sell ICICI Bank shares?

Morgan Stanley: Overweight 

Analysts at Morgan Stanley expect a significant shift towards end-to-end digital originations at large private banks like ICICI, and this implies potential for significant operating leverage over the medium term. “Cyclically, the bank highlighted resilient macro despite global challenges and we sensed continued strong momentum in PPoP and asset quality. We believe ICICI Bank should graduate to a compounding machine, and foresee continued re-rating over the next few years. Given the size of the long-term growth opportunity, investors have been willing to pay high multiples for financials that have displayed strong earnings compounding and avoided bad loan cycles. ICICI is well placed for that, we believe,” they said. The foreign brokerage maintains Overweight rating on the stock with a target price of Rs 1,250 per share.

Nuvama Wealth Management: Buy

With rising impetus on its bank-tech initiatives, strong execution, and favourable macro tailwinds, Nuvama analysts believe ICICI Bank is set to sustain its best-in-class profitability with digitally-led, market share gains in all segments. ‘ICICI’s clear bank-tech leadership amidst India’s digital revolution, lends ICICI an edge over its peers,” they said adding that ICICI remains our their top pick with a target price of Rs 1,115 as they believe that the Customer 360-approach will enable gains for shareholders.

Motilal Oswal Financial Services: Buy

According to analysts at Motilal Oswal, ICICI Bank has been reporting strong growth, led by its digital capabilities and its constant efforts toward simplifying customer journeys and strengthening the trust and brand. “This will enable ICICI Bank to become a preferred banking partner for its customers. The digital journey for the bank has resulted in increased throughput and improved efficiency, which in turn has resulted in increased market and wallet share,” the said. The brokerage expects the lender to register a loan CAGR of 20% over FY22-24 and estimate FY24E RoA, RoE of 2.1%, 17.2%, respectively. “We reiterate our Buy rating with a SoTP-based TP of Rs 1,150 (3.1x FY24E ABV),” they said, adding that ICICI Bank remains their top pick in the sector as they believe that besides the steady investment return, owning ICICI Bank stock also brings a sense of pride in every investor’s portfolio.

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Anand Rathi Share and Stock Brokers: Buy

The brokerage also remains positive on ICICI Bank, considering a strong balance sheet, strong credit growth, continuous reduction in NPA, adequate capital adequacy, strong growth in advances, high casa ratio and improving asset quality. “We maintain our BUY rating on the stock with a revised target price of Rs 1,094 per share,” it said. 

The company is, however, exposed to credit, liquidity and interest rate risk. Any adverse movement in the macroeconomic indicators may lead to lower-than-estimated growth and profitability, according to analysts. The bank is also exposed to operational risks such as frauds which can occur through breaching bank’s security.As a result of this, the bank may lose capital and trust of customers which damages the reputation of the bank and makes it difficult to attract deposits. The lender is exposed to compliance risk as well.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com 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.)

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First published on: 05-12-2022 at 13:44 IST