Shares of private sector lender ICICI Bank rallied more than 8.5% on Thursday to hit a six month high. Morgan Stanley said that the stock could double in the next 2 years.
ICICI Bank: Shares of private sector lender ICICI Bank rallied more than 8.5% on Thursday to hit a six month high. ICICI Bank shares zoomed to an intraday high of Rs 345 on NSE this morning, after the company clarified yesterday that it has made complete disclosures about its bad loans and non-performing assets (NPAs) in its annual report, investor presentations and analysts’ calls. The shares were seen trading at their highest level since February 8, 2018. It touched the 52-week high of Rs 365 on January 29, 2018, in intra-day trade.
In its report, the global brokerage Morgan Stanley noted that ICICI Bank is among its top pick in Asia and the stock could double, as the firm moves from impaired to normalised growth. According to the firm, the stock could be volatile for the next 2-3 quarters. Morgan Stanley said that the risk-reward ratio remains favourable with margin of safety at 1.2 price to book value.
Morgan Stanley has raised share price target to Rs 460 from Rs 425, and has rated the stock as ‘overweight’. “Fundamental trends have moved in line with expectations, with aggressive recognition and provisioning; net bad loan formation has slowed and should remain low,” the firm stated.
Gautam Duggad of Motilal Oswal said that the shares have been their top pick in corporate banking space. “This has been our preferred pick in the corporate banking space. Management clarity, clarity in the asset cycle, provisions have been raised further, valuations are in its favour, things seem to be settling down. We will have to wait for a few quarters, as far as as asset quality is concerned. Given where valuations are, the risk reward is very favourable.The quality of earnings has improved for the better. The bank has made higher provisions. Overall stressed assets have also come off,” Gautam Duggad, Head Of Research – Institutional Equities at Motilal Oswal told ET Now in an interview.