The banking sector has seen significant pressure, and key stocks like ICICI Bank have been in focus. The share price of ICICI Bank has seen some recovery in early trade today after 3% correction in the last 5 sessions. Motilal Oswal believes that the large cap private lender is well-positioned to deliver steady growth, supported by loan growth, steady margins and asset quality.
Motilal Oswal has maintained a ‘Buy’ rating on ICICI Bank with a target price of Rs 1,750. This implies over 40% upside from current levels.
“Growth is becoming increasingly broad-based, led by business banking and improving corporate demand, while the bank continues to focus on strengthening its liability franchise,” Motilal Oswal noted.
ICICI Bank targets higher fee income, operating leverage
The domestic brokerage house noted that after benefiting from margin expansion in recent years, the bank is now focusing on increasing fee income and improving operating leverage to support the next phase of earnings growth.
The management is also continuing to invest in distribution and technology to strengthen its market position and improve customer reach.
Asset quality remains strong
Motilal Oswal noted that the Bank’s asset quality remains a key strength for the bank, supported by low credit costs of around 45–50 basis points through the cycle and strong provision buffers. This helps ensure stability in earnings even during economic fluctuations.
“The bank’s provision buffers remain strong, with contingency reserves of Rs 13,100 crore (0.9% of loans), providing adequate insulation against macro stress,” Motilal Oswal noted.
During Q3, the bank recognised an additional standard asset provision of Rs 1,280 crore on an agri portfolio (Rs 20,000-25,000 crore) following RBI’s Priority Sector Lending (PSL classification).
Overall, ICICI Bank’s asset quality outlook remains strong, “with limited incremental stress and continued recovery traction, and we estimate Gross NPA to improve further to 1.43% and Net NPA to improve to 0.34% by FY28,” Motilal Oswal added.
Conclusion
Motilal Oswal retains the ‘Buy’ rating on ICICI Bank saying that the bank is focusing on increasing the market share. ICICI Bank currently has the market share of 7%.
“With a disciplined, risk-calibrated approach and increasing focus on market share gains, ICICI Bank remains well-positioned to deliver consistent compounding.”
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.