Brokerages bullish on ICICI Bank stock after Q4 results

An in-line ICICI Bank result for the quarter ended March 31, 2024, has led to analysts raising target price and earnings per share (EPS) forecast on the stock.

ICICI Bank, they said, appeared least vulnerable to regulatory action on its digital offerings or for risk monitoring lapses.

Compliance with regulatory norms shall be one of the key valuation drivers over the next 12 months, and ICICI ticks most boxes, even as  many of its peers are being pulled up for lapses, analysts noted.

Meanwhile, on the bourses, ICICI Bank stock price gained 5 per cent to hit a fresh record high of Rs 1,163 apiece on the BSE in Monday’s (April 29) intraday trade.

The market capitalisation of the private lender zoomed past Rs 8-trillion-mark and settled at Rs 8.14 trillion.

The stock closed 4.67 per cent higher as against 1.28 per cent rise in the benchmark S&P BSE Sensex.

In Q4FY24, ICICI Bank posted net profit of Rs 10,707 crore, registering a growth of 17 per cent year-on-year (Y-o-Y). Its net interest income (NII) increased by 8 per cent Y-o-Y to Rs 19,093 crore, with net interest margin at 4.4 per cent versus 4.43 per cent quarter-on-quarter (Q-o-Q).

NII was aided by loan growth of 3 per cent Q-o-Q and 16 per cent Y-o-Y with deposits up 6 per cent Q-o-Q and 20 per cent Y-o-Y.

The bank’s loan-to-deposit ratio (LDR) stood at 83.8 per cent against 86.6 per cent Q-o-Q.

Nuvama Institutional Equities

Buy — Target price: Rs 1,295

ICICI Bank remains the most consistent in delivering core earnings, granular growth, and moderating opex growth ahead of peers.

With an early-mover advantage in leveraging technology for growth and risk management, we view ICICI Bank as less vulnerable to regulatory lapses than peers.

We revise FY25E and FY26E EPS upwards by 5 per cent and 6 per cent, respectively.

This, along with a rollover in base, pushes up the target price to Rs 1,295 from Rs 1,200 earlier.

Motilal Oswal Financial Services

Buy — Target price: Rs 1,300

ICICI Bank reported another steady quarter aided by a stable mix of a high-yielding portfolio (retail/business banking) and continued traction in BB, SME, and secured loans.

Although the pace of NIM contraction has decelerated, persistent funding cost pressure may keep margins low.

We increase EPS estimate by 2 per cent for FY26, with little change to our FY25 outlook.

We expect RoA/RoE of 2.26 per cent/18 per cent in FY26.

We expect the bank to sustain a 14 per cent CAGR in net profit over FY24-26.

JM Financial

Buy — Target price: Rs 1,330

Management expects some increase in deposit costs to continue although they wish to maintain NIMs around current levels by playing on favourable risk-reward growth strategy.

We expect credit cost to normalise, going ahead, and build average credit cost of 52 bps over FY25-26.

We believe ICICI Bank firmly remains on a path to deliver 2.3 per cent/18.5 per cent average RoA/ RoE over FY25-26, aided by asset quality being in good shape, continued growth mome­nt­um while margins are expe­cted to moderate slightly.

ICICI Bank has conti­nued to deliver a best in class return profile among its larger private peers which will help it retain its valuation premium.

Kotak Institutional Equities

Buy — Target price: Rs 1,300

We have marginally increased our earnings and believe that the scope for upgrades is still available.

Over the past quarter, the bank has wide­ned its valuation differential with other private banks.

The ability for the bank to trade at meaningfully higher mult­iples, however, looks unlikely.

We are seeing most banks comfortable to grow at 15 per cent CAGR and not necessarily looking to accelerate faster as the focus has shifted to building a sustainable long-term franchise with fewer lending mistakes.

Prabhudas Lilladher

Buy — Target price: Rs 1,450

Balance sheet profile has further improved since share of retail/SME has increased from 73.6 per cent in FY23 to 75.4 per cent in FY24; LDR has reduced to 83.8 per cent; and LCR is adequate at 123 per cent.

Opex intensity is likely to reduce; as we lower opex for FY25/26 by 3 per cent; we see a 12.7 per cent CAGR in opex.

Hence, our core PAT for FY25/26 is raised by 4.5 per cent. Likely RoA/RoE for FY26 at 2.1 per cent/17.2 per cent remains one of the best-in-class.

Mainta­ining multiple at 3.0x, we raise the target to Rs 1,450.

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