Buy ICICI Bank Ltd With A Target Price of Rs. 900: HDFC Securities

The stock of ICICI Bank Ltd. has been recommended for buy by HDFC Securities, India's leading equity broking company, with a target price of Rs 900. From the market price of Rs 760, the brokerage expects a rise of roughly 18 percent in six months. ICICI Bank is the second-largest private sector bank in India, with 5,288 branches and 14,040 ATMs spread across the country.

Q2FY22 results of ICICI Bank

The brokerage has said "ICICI Bank reported strong all round performance in Q2FY22. The Net Interest Income (NII) grew by 24.8% YoY and 7% QoQ aided by improvement in the NIM. The Fee Income growth was strong at 21% YoY. OPEX grew 28% YoY and 9% QoQ. Despite this, the core operating profit rose 23.3% YoY and 10.6% sequentially. Net Profit stood at Rs. 55.1 bn, up 29.6%/19.4% YoY/QoQ."

According to the brokerage's research report "The bank continued to deliver industry-leading loan growth at 17% YoY, driven by mortgage (+25%) and business banking (+43%). The retail portfolio grew by 20% YoY and 5% QoQ. Excluding the builder portfolio, the domestic corporate portfolio grew by 14% YoY and was flat sequentially. Deposits also reported healthy growth of 17.3% YoY. During the quarter, average current account deposits increased by 35.7% YoY and average savings account deposits by 24.9% YoY. The average CASA ratio improved to 44.1% compared to 43.7% in the June quarter. This has further helped the bank in reducing the cost of funds (12bps QoQ improvement). The cost of funds now stands at industry best level."

Buy ICICI Bank Ltd. with a target price of Rs. 900

HDFC Securities in its research report has stated that "ICICI Bank has reported strong all round performance in Q2FY22. Asset quality shocks of Q1FY22 were largely reversed during the quarter, with net slippages at 0.1% of loans. With PCR at 80% and non-NPA provisions at 2% of loans, credit costs are likely to remain subdued as the back-book clean-up is nearly complete. There could be higher recoveries in the next two-three years than slippages. We have envisaged 16.7% CAGR in Net Interest Income and 24.8% CAGR in net profit over FY21-FY24E. Further, we have estimated that the loan book would grow at 17% CAGR over this period. We expect NIM to trend around this all-time high level and asset quality might improve further."

The brokerage further claims that "We feel that investors can buy ICICI bank at Buy at Rs.758-764 and add more at Rs.692-695 band. We expect the Base case fair value of Rs.847 (~2.55xSA ABV Sep-22+SOTP) and the Bull case the fair value of Rs.900 (~2.75xSA ABV Sep-22+SOTP) over the next 2 quarters."

Disclaimer

The stock has been picked from the brokerage report of HDFC Securities Limited. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.