scorecardresearchICICI Bank seen breaching ₹1,000 in 12 months; remains top pick, says

ICICI Bank seen breaching 1,000 in 12 months; remains top pick, says Motilal Oswal

Updated: 25 Jul 2022, 03:03 PM IST
TL;DR.

Motilal Oswal (MOSL) lauded that ICICI Bank keeps on raising the benchmarks with exemplary performance every quarter and it cannot help but admire how the bank has consistently delivered industry-leading performance amid a challenging period.

Motilal Oswal (MOSL) lauded that ICICI Bank keeps on raising the benchmarks with exemplary performance every quarter and it cannot help but admire how the bank has consistently delivered industry-leading performance amid a challenging period.

Motilal Oswal (MOSL) lauded that ICICI Bank keeps on raising the benchmarks with exemplary performance every quarter and it cannot help but admire how the bank has consistently delivered industry-leading performance amid a challenging period.

After an exemplary June quarter for the private sector lender ICICI Bank, brokerage house Motilal Oswal (MOSL) lauded that ICICI Bank keeps on raising the benchmarks with exemplary performance every quarter and it cannot help but admire how the bank has consistently delivered industry-leading performance amid a challenging period.

The lender remains MOSL's top pick in the sector. It has a 'buy' call on ICICI Bank with a target price of 1,050, implying a potential upside of 31 percent.

"What looks to be a picture-perfect performance in one quarter only adds more colors in the ensuing quarter. Our conviction in the bank remains strong and we believe that the journey is likely to get even more exciting in the coming years," said the brokerage.

In the June quarter, the private sector bank reported a 50 percent in net profit to 6,905 crore against a profit of 4,616 crore in the same quarter a year ago. ICICI Bank’s total income also improved to 28,336.74 crore in the quarter under review, up from 24,379.27 crore in the year-ago period.

The brokerage noted that ICICI's growth in PAT was aided by healthy NII growth, strong fee income, and controlled provisions. The bank reported an annualized RoA and RoE of 2 percent and 15.9 percent in Q4FY22, it added.

NII growth stood at 21 percent YoY (inline), aided by a 2 bps QoQ expansion in domestic NIM (net interest margin) to 4.14 percent and healthy loan growth of 21 percent, it further informed.

"ICICI Bank reported a robust operating performance, driven by a combination of impressive core PPOP performance and controlled provisions, despite the creation of contingent provisions, underpinned by pristine asset quality. A stable mix of the high-yielding portfolio (Retail/Business Banking) and a low-cost liability franchise is fueling steady NII growth," explained the brokerage.

The bank is seeing a strong recovery in business across key segments such as Retail, SME, and Business Banking while the set quality trends also remain steady and the PCR (provision coverage ratio) remains one of the best in the industry at 80 percent, it added.

Ahead of this new growth cycle, the bank is already positioned well with superior margins, strong RoE/asset quality and robust capitalisation levels, noted the brokerage.

It highlighted that the stock return will be a function of earnings growth and re-rating over the coming years and ICICI Bank has all the ingredients in place to take over the pole position in the Indian Banking space.

MOSL further stated that over the last couple of quarters, due to intense FII selling, the bank’s absolute performance has been limited; however, with flawless execution it is only a matter of time before ICICI’s valuation will expand to its deserving multiple, thus generating supernormal returns for investors.

So far in 2022, ICICI Bank has zoomed 8 percent as against a 3.7 percent decline in benchmarks. Among its peers HDFC Bank has lost 6 percent, Kotak Bank rose 1.7 percent, and Axis Bank advanced 7.7 percent in this period.

In the last 1 year, the stock has risen 18 percent while in the last 5 years, it has given nearly 3-fold returns to its investors.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

First Published: 25 Jul 2022, 03:03 PM IST