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After a series of weak quarterly results this earnings season, ICICI Bank Ltd led to positive surprises, leading to an upward revision of target prices. Analysts say the private lender is beating Street estimates on most counts, be it asset quality, deposit growth, net interest margin (NIM) or best-in-class return on assets (ROA), and that a revaluation will take place. forward.
ICICI Bank posted very strong Q2F25 numbers and lower sequential slippage even as peers faced a slowdown in growth and a rise in credit costs, Nuvama Institutional Equities said. According to the report, ICICI Bank’s strong credit growth of 4 percent quarter-on-quarter and 15 percent year-on-year, decline in delayed slippage from 2.1 percent to 1.7 percent, controlled operating costs and decline in credit costs were the key positive highlights in the second quarter.
Operating PPoP before provisions grew 7 percent quarter-over-quarter or 13 percent year-over-year, one of the highest in the industry.
“ICICI’s results are independent of sector pressures from deposit growth and deteriorating asset quality. The continued focus on granularity and quality assets has made ICICI’s balance sheet strong enough to deliver strong and consistent results every quarter since FY21. We repeat this as our choice for the top sector. Our target price is Rs 1,470/2.8x BV FY26E (earlier Rs 1,450),” Nuvama said.
MOFSL said ICICI Bank has reported six “glorious years of performance” since Sandeep Bakhshi took charge as MD & CEO on October 15, 2018. The bank has consistently beaten Street estimates on one measure or another, even as the macro environment changed significantly. over the years, according to the brokerage.
“We raise our EPS estimates by 2.8 percent/1.8 percent for FY25/FY26 and estimate RoA/RoE at 2.19 percent/17.4 percent in FY26. Re-buy with a SoTP-based target price of Rs 1,500 against Rs 1,400 earlier,” it said.
PL Capital said ICICI Bank remains the best performer in the sector and a revaluation is needed.
While the unsecured pool is under pressure across the system, the bank’s portfolio has outperformed against large private sector peers in H1FY25, as reflected in best-in-class provisions of 43 basis points against private sector peers’ 50-78 basis points , according to PL Capital. .
“Therefore, the provisions for the 24-27E financial year may be lower, namely 40-50 basis points (the sector peers 50-65 basis points). The bank is making consistent efforts to protect core PPoP, while countering the softer NIM environment with cost control measures. Core ROA of 2.1 per cent is best in class. We keep the price at 3 times and increase the target price from Rs 1,520 to Rs 1,640, while moving towards the core ABV of September 26.
ICICI Bank reported a 14.47 per cent rise in net profit at Rs 11,746 crore, against Rs 10,261 crore in the year-ago quarter, boosted by gains in government bonds. Net interest income (NII) for the quarter rose 9.5 percent YoY at Rs 20,048 crore, compared to Rs 18,308 crore YoY. Net interest margin (NIM) for the quarter stood at 4.27 percent, up from 4.36 percent in the June quarter and 4.53 percent in the year-ago quarter.
ICICI Bank: Nirmal Bang said the lender’s reported second-quarter earnings were more than 7 per cent above consensus estimates each. NII growth was in line with estimates, but PPoP came in 4 percent above estimates, the report said.
“We have valued ICICI Bank at 2.9 times its September 2026E ABV, resulting in a standalone value per share of Rs 1,344. If we add the subsidiary value per share of Rs 201, we derive a target price of Rs 1,545 , versus Rs 1,544 earlier. is 10 percent higher than the average over the last five years, a multiple of 2.6 times, which adequately reflects an earnings CAGR of 12.7 percent over FY24-27,” said Nirmal Bang .
This broker said that ICICI Bank’s earnings will be determined by lending CAGR of 15.1 percent, NIM of 4.2 percent, stable operating ratios and average cost of credit of 58 basis points, leading to an average RoA of 2, 3 percent during FY24-FY27, Nirmal,” Bang said while suggesting a ‘buy’ on the stock.
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