paragraph

Global brokerage house Jefferies, in a recent note, said that <a target="_blank" href="https://mintgenie.livemint.com/stocks/icici-bank-S0003019">ICICI Bank </a>has the best risk-to-reward ratio among all global banks and has a set target price of ₹1,070 for the stock, indicating an upside of 50 percent from its June 24th close of ₹713.

"ICICI Bank offers among the best risk/reward ratios among global banks in terms of RoA (return on assets) and PB (price to book) in FY23/CY22, according to the comparison. As its one-year forward core banking PB of 2x is fully supported by its RoA of 1.8-1.9 percent, which also has a possible upside risk, it trades at 1.1x on PB/RoA," noted the brokerage. In reality, it said, ICICI Bank offers among the greatest RoA among global banks that are near 1x on PB/RoA.

In the base case scenario, Jefferies has set a 12-month target price of ₹1,070 for the stock. However, it stated that if a few things go in ICICI Bank's favour, it can hit ₹1,170 (in the bull case scenario), indicating a possible upside of 64 percent from the current levels. Meanwhile, Jefferies' bear case scenario has a target price of ₹660 for the stock.

The brokerage noted that ICICI Bank is not only well poised to leverage on growth pickup in Indian bank credit from 8-9 percent to 12 percent and the ramp-up of SME vertical, but also from the recent correction, coupled with high ROA.

It has outperformed many of its peers, both in terms of stock performance and financial performance, in recent years and also edged past its biggest competitor <a target="_blank" href="https://mintgenie.livemint.com/stocks/hdfc-bank-S0003020">HDFC Bank</a>, turning street opinion in its favour, added Jefferies.

The scrip has risen around 10 percent in the last one year. In comparison, <a target="_blank" href="https://mintgenie.livemint.com/indices/details/NSI/nifty-bank-I0006">Nifty Bank </a>has declined 4 percent while the <a target="_blank" href="https://mintgenie.livemint.com/indices/details/NSI/nifty-50-I0002">Nifty50 </a>index is flat in this period. Among peers as well, the stock has outperformed all Nifty bank constituents, except <a target="_blank" href="https://mintgenie.livemint.com/stocks/au-small-finance-bank-S0003247">AU Small Finance Bank</a> (up 20 percent in 1 year). Among other private lenders, HDFC Bank has lost over 10 percent while <a target="_blank" href="https://mintgenie.livemint.com/stocks/axis-bank-S0003048">Axis Bank </a>and <a target="_blank" href="https://mintgenie.livemint.com/stocks/indusind-bank-S0003023">IndusInd Bank </a>are down over 15 percent each in this time. <a target="_blank" href="https://mintgenie.livemint.com/stocks/kotak-mahindra-bank-S0003043">Kotak Bank</a> also lost over 2 percent.However, in 2022 so far, ICICI Bank has lost around 7 percent.As per Jefferies, the lender is better placed due to its lower exposure to riskier sectors or unsecured retail loans. ICICI Bank also has the strongest deposit franchises and should reap the benefit of the same, added the brokerage.ICICI Bank's presence across segments of credit — corporate (working capital, capex) and retail and its strong deposit franchise — Casa ratio of 49 percent, funding cost of below 4 percent, and retail term-deposit rate at 5.5 percent position it well on liquidity, it said."We think the bank's growth will continue to be boosted by the ramp-up of the SME/ BB vertical where credit grew 39 percent YoY in FY22, and we see over 25 percent CAGR over the next two years. It could also leverage an uptick in capex cycle given its domain expertise in project financing," stated Jefferies.It also sees multiple positive catalysts for the lender like a strong presence across the various segments, a solid franchise network, restoration of normalcy in the lending activities, sound asset quality and a higher CASA ratio.An area of potential positive surprise is its overseas NIMs, which could expand, as the global liquidity market has tightened and this could lead to higher margins in the medium term, noted Jefferies.Jefferies sees ICICI Bank delivering 17 percent CAGR in profit over FY22-24 and ROE of 16 percent.Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

Jefferies sees this private lender rising 50% in 1 year; says has best risk-reward ratio

In the base case scenario, Jefferies has set a target price of ₹1,070 for the stock. However, it can hit ₹1,170 (in bull case scenario), indicating a possible upside of 64 percent from the current levels. Meanwhile, Jefferies' bear case scenario has a target price of ₹660 for the stock.

Market Wrap: Indices close high for 3rd straight day, Sensex rises over 400 points

S&P affirms 'BBB-' rating on ICICI Bank on improved asset quality

How to trade in this volatile market? HDFC Securities suggests these strategies

Morgan Stanley’s Wilson Sees Temporary Respite From Bear Market

Gold gains as G7 nations plan to ban bullion imports from Russia

Britain’s Battered Economy Is Sliding Toward a Breaking Point

China’s Economy Improves in June From Lockdown-Induced Slump

5 reasons why BofA Securities cut Nifty target to 14,500; Prefers a defensive strategy

Large realty players likely to deliver double-digit growth in FY23: Report

From Nithin Kamath of Zerodha to Uday Kotak: Market experts mourn Rakesh Jhunjhunwala's demise

The 62-year-old Rakesh Jhunjhunwala passed away on Sunday morning in Mumbai.

How does an investor measure a mutual fund’s volatility? Things you need to know

Before you invest in a mutual fund, you should evaluate its performance based on its returns as well as on the consistency of these returns — something that can be measured by standard deviation. We share more details on this here.

Zero cost term plans: Getting insurance premium back in case of discontinuance

Under these term insurance plans; policyholder can discontinue paying premiums at a stage of life where they feel they don’t need an insurance any more

Rakesh Jhunjhunwala: What made the man so special

<ul><li>Rakesh Jhunjhunwala has left a legacy behind. A perpetual believer of India story, he was always bullish about the country because of the immense opportunities. He had also been vocal about the reforms initiated by the government which he believed will not only facilitate India's growth at present, but will open several new opportunities in future also.</li></ul>

Rakesh Jhunjhunwala, India's Warren Buffet, dies at 62

A chartered accountant by profession from the desert state of Rajasthan, Jhunjhunwala started dabbling in stocks while in college and went on to manage a stock trading firm, RARE Enterprises.