ICICI Bank remains the top pick for analysts who see another 30% upside

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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ICICI Bank’s March quarter numbers beat Street estimates, mainly led by a healthy margin and contained provisions, and partly offset by a one-off treasury hit due to treasury loss of ₹280 crore. Following the results, brokerages have either maintained or raised their price targets on the banking stock. The target range stays largely in ₹1,150-1,450 range, suggesting over 30% potential upside over the prevailing price.

Emkay Global has upped its target price on the stock to ₹1,450 per share from ₹1,400 per share while Motilal raised its target on the stock to ₹1,300 from ₹1,250. JPMorgan maintained its target of ₹1,300, Nomura sees it at ₹1,335, and Bernstein ₹1,150.

Jefferies, meanwhile, said ICICI Bank remains its top pick in the sector.

Nuvama, which reiterated ICICI Bank as a top ‘buy’, raised its price target on the stock to ₹1,295 from ₹1,200 per share. The brokerage said the bank remains the most consistent in delivering core earnings and granular growth.

“With an early-mover advantage in leveraging technology for growth and risk management, we view ICICI as less vulnerable to regulatory lapses than peers, not to mention the moderation in opex much ahead of peers,” it noted.

Nuvama has revised its FY25 and FY26 earnings per share (EPS) estimates upwards by 5% and 6%, respectively.

Emkay said ICICI Bank remains its preferred pick, given its superior returns profile, top-management credibility, and strong capital and provision buffers. The broking firm also said ICICI is set to hold a premium over HDFC Bank.

It expects the lender to deliver higher return on assets (RoA) at 2.1-2.3% and return on equity (RoE) at 17-18% over FY25 to FY26, mainly on the back of healthy margins and fees and lower LLP.

Key risks, as per the brokerage, include higher middle and senior management attrition leading to business dislocation, slower-than-expected growth and margin trajectory owing to macro disruptions.

Motilal Oswal said ICICI Bank reported another steady quarter, driven by healthy NII and controlled opex and provisions backed by healthy asset quality.

The brokerage has increased its EPS estimates by 2% for FY26, with little change to its FY25 outlook. “We expect RoA/RoE of 2.26%/18.0% in FY26. We expect the bank to sustain a 14% CAGR in PAT over FY24-26E,” it said.

In a post-earnings concall, ICICI Bank’s Sandeep Batra said the lender is expecting its net interest margin (NIM) to remain rangebound unless there is a change in repo rate. Batra also expected the RBI to undertake shallow rate cuts.

Shares of ICICI Bank Ltd. opened a percent higher on Monday. The stock has gained 12% so far this year.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow