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Buy This Banking Stock, The Shares Can Jump 40%, Brokerages Upbeat

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Most broking firms are optimistic on the stock of ICICI Bank and have recommended buying the stock for solid returns. Broking firm, Motilal Oswal is also upbeat on the stock and let's tell investors why.

 

Solid all round improvement

Solid all round improvement

Motilal Oswal feels that there has been a solid all round improvement in the bank's performance. "ICICI Bank reported an all-round improvement in operating performance, with core PPOP up 21% YoY (excluding dividends), margin improving by 4 basis points, Qwuarter on Quarter to 4%, and robust asset quality driving a sharp decline in credit cost, even as the bank increased its contingent provision buffer by Rs 10.25 billion. The bank reported a RoA/RoE of 2.1%/17% in 4QFY22," Motilal Oswal has said.

Overall results above expectations
 

Overall results above expectations

Like most brokerages, even Anand Rathi believes that the results were above expectations. "Total advances grew 17% YoY to Rs. 859,020 crores as of March 31, 2021. Also, total deposits increased by 14% YoY to Rs. 10,64,572 crores. Gross NPA to gross customer assets for the quarter reported at 3.6% vs 4.13% in Q3-FY22. Net NPA to net customer advances for the quarter reported at 0.76% vs 0.85% in Q3-FY22. Overall, results are above our expectations," Anand Rathi has said in a report.

Price target of Rs 1050

Price target of Rs 1050

Brokerage firm Motilal Oswal has set a price target of Rs 1050, which implies an upisde of almost 40% from the current levels.

"We expect the bank to deliver a RoA/RoE of 1.9%/16.3% in FY24. We maintain our Buy rating with a SoTP-based target price of Rs 1,050 per share (based on 2.8x FY24E ABV for the core bank), implying a potential upside of 40%. ICICI Bank remains our top pick in the sector," the brokerage has said.

Advances continue to see robust growth

Advances continue to see robust growth

On the business front, advances grew 17% YoY and 6% QoQ, led by a 17%/20% YoY growth in Domestic/Retail loans (excluding Agri). Among segments - Credit Card spends rose 1.8x YoY, led by higher activation levels and strong traction in the co-branded card with Amazon. The Business Banking/SME portfolio rose 43%/34% YoY. The Corporate book grew 9% YoY, led by disbursements to higher-rated entities. Within Retail, growth in Mortgages was consistent at 20% YoY. The Unsecured portfolio saw a strong traction and posted healthy growth with Personal loans/Credit Card growing 27%/45% YoY and 10% QoQ each.

The stock of ICICI Bank was last see trading at Rs 758 on the National Stock Exchange.

Story first published: Monday, April 25, 2022, 11:02 [IST]
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