In one week, the stock of the second largest private sector bank in India has outperformed the market by gaining 3.5 per cent, as compared to the 1.9 per cent rise in the BSE Sensex. The bank’s market cap hit Rs 9.01 trillion in intra-day trade on Wednesday.
Thus far in the current calendar year 2024, ICICI Bank has rallied 28 per cent, as against the 15 per cent rise in the benchmark BSE Sensex.
With a presence in banking, insurance, asset management, securities broking and private equity, the ICICI Group is one of the largest players in the Indian financial system.
ICICI Bank said, going forward, the bank would focus on maximising its profit before tax, excluding treasury, within the guardrails of compliance and risk management. It believes there are significant opportunities for profitable growth across various sectors of the Indian economy.
ICICI Bank, in its FY24 annual report, said that it will focus on growing its loan portfolio in a granular manner with a focus on risk and reward, with return of capital and containment of provisions within targeted levels being a key imperative.
However, the bank has not set any specific targets for loan mix or segment-wise loan growth. ICICI Bank would aim to continue to grow its deposit franchise, maintain a stable and healthy funding profile and competitive advantage in cost of funds, it said.
The company’s top management has reiterated its focus on risk-calibrated profitable growth, while taking the entire bank to the customer. In this regard, the bank has planned to de-list its securities business subsidiary and merge it with the bank to improve cross-sell opportunities.
Notwithstanding the rising sectoral headwinds and hence turning cautious on the sector, analysts at Emkay Global Financial Services, believe the bank is well positioned to deliver better-than-system growth/asset quality outcomes, which coupled with its strong capital/provision buffers and credible top management, deserve premium valuations.
Notably, the bank also carries industry-high specific PCR, coupled with contingent provision buffer (1.1 per cent of loans), which should support its RoA of above 2 per cent during FY25-27E, it added.
The bank has also refuted claims on current MD and CEO Sandeep Bakhshi’s early retirement plans, and believes that Bakhshi will duly complete his ongoing term till October, 2026.
Emkay Global has retained its ‘Buy’ rating on ICICI Bank, with an unchanged target price of Rs 1,450 per share, based on 2.7x Sep-26E standalone bank ABV and subs at Rs 200 per share.
ICICI Bank has shown remarkable strength in maintaining its business momentum across different segments. The management is optimistic about the ample deposit inflows, which are expected to fuel credit growth opportunities in the upcoming quarters.
The bank remains well-capitalised to grab the credit opportunities in coming quarters. KRChoksey believes the bank’s business momentum will continue to see a healthy uptick, which will aid in maintaining its superior return ratios.
“As a result, we maintain our ‘Buy’ rating on ICICI Bank’s share with a target price of Rs 1,430 per share,” the brokerage firm said in its Q1FY25 result update for ICICI Bank.
First Published: Sep 18 2024 | 12:23 PM IST
