CLSA called the private lender best in class, as it increased target on the stock to Rs 1,100 from Rs 1,000. Net slippages were negligible with high recoveries, it said. Jefferies finds the stock worth Rs 1,000 as it believes the quarterly results were impressive on most counts.
JM Financial called September the perfect quarter for ICICI Bank and said the stock is up for rerating. It has a target of Rs 1,010 on the stock. Motilal sees the stock at Rs 1,000, Emkay Global at Rs 950, Edelweiss Rs 890 and Goldman Sachs at Rs 829.
The stock rose 12.95 per cent to hit a 52-week high of Rs 859.15 on BSE.
“We see ICICI hitting the 2 per cent RoA mark by FY24 which should drive a substantial valuation rerating from current core banking business valuation of 1.9 FY24 BVPS. We raise our target multiple to 2.75 times FY24E BVPS for the core banking business and maintain a BUY rating with a revised target price of Rs 1,010,” JM Financial said.
Emkay Global said the bank’s asset quality was better than expected, with the gross NPA ratio down 33 basis points sequentially to 4.8 per cent while the restructured pool was contained at Rs 9,700 crore, which was 1.3 per cent of loans.
This is against HDFC Bank’s restructured pool, which was 1.7 per cent of loans.
“ICICI has an adequate provision buffer at 20 per cent against the required 10 per cent. Specific PCR remains peer-best at 80 per cent of NPAs and Covid buffer at 0.8 per cent of loans. This should keep LLP contained, and thus drive decade-best RoAs at 1.7-1.8 per cent and RoEs 14-17 per cent over FY22-24,” Emkay said.
Axis Securities said that loan growth of the bank has strengthened with visible outperformance among peers. With a continued outperformance on loan growth, NIMs and asset quality, re-rating of the bank is on track, it said.
“Slippages and restructuring levels are manageable and indicate a better asset quality going forward with adequate provisioning buffers in place. ICICI Bank has been able to garner market share in most of its segments along with improvement in the margins. Higher loan growth, improving operating profits, strong provision buffer coupled with a strong deposit franchise will help ROA/ROA expansion over FY22-24.We believe valuations are competitive for the stock, given strong liability franchise and leveraging opportunities across group products,” it said.
Edelweiss said a focused approach and structural changes underpin ICICI’s sustainable rerating. At current combination of safety-cheapness-recovery gearing, the bank appears to be best placed, it said.
“A leg-up from robust subsidiaries reinforces our positive view. We continue to earmark ICICI as our top pick,” it said while setting a target of Rs 890 on the stock.
