Buy This ICICI Group Entity For Double Digit Gains In 3 Months: HDFC Securities

Indian markets tracking weak global cues are trading with a cut of over 1%. At around the time of writing this copy, Nifty has sunk to levels below 17,600. Bank Nifty is the underperformer down by 1.66%. Importantly, clues of aggressive rate hikes by central banks globally as well as recession fears in China are pushing markets lower.

Meanwhile, brokerage firm HDFC Securities has come up with its positional calls. Typically, positional calls are based on technical analysis of the stock by the brokerage's research experts. The stock ideas are based on the market movements by examining historical data, like price and volume.

Buy ICICI Prudential for 3 months suggests HDFC Securities

The brokerage firm has given a 'Buy' call on the stock of ICICI Prudential. This is the brokerage's technical positional pick on which the target price is set at Rs. 697.Given the last traded price of Rs. 584.55, the stock offers a potential upside of over 19%. The suggested stop loss is Rs. 545 per share.

Buying range as provided in the report is Rs. 585-602.

Technical observations on the scrip

ICICI PRULI has corrected from a high of 724 touched in September 2021.

The stock recently found support at the 430 levels where it made a double bottom and has strongly
bounced back from these levels in the last few months.

Last week on Thursday, the stock broke out of the 540-580 range on the back of healthy volumes, indicating the
stock is set to continue its short term uptrend.

Weekly momentum readings like the 14-week RSI are in rising mode and not overbought, which is
encouraging.

With the intermediate technical setup too looking positive, we believe the stock has the potential to
move higher in the coming weeks and therefore recommend a buy. Our entry levels with stop loss and
targets have been mentioned above

Company's Q1Fy22 results

The insurer's Q1 profit for Fy23 declined sequentially from Rs. 184.67 crore in March ended quarter to Rs. 155.69 crore. In the same period last year, the company reported net loss of Rs. 185.73 crore. For the last five fiscal years, the company's EPS is on a constant decline and for Fy22 was at Rs. 5.28 as against Rs. 11.28 in Fy18.

Valuations wise, the stock is trading at decent valuations with TTM PE of 76.44. Nonetheless, on parameters like ROE, the counter falters.

 

About ICICI Prudential

ICICI Prudential is the large cap insurance arm of the larger ICICI Group. The company is a joint venture between ICICI Bank Limited and Prudential Corporation Holdings Limited. It provides life insurance, pensions and health insurance to individuals and groups.

Disclaimer

The stock mentioned in the story is taken from the brokerage report of HDFC Securities. Readers should not construe the story for investment advice into the stock and should carry out their own due diligence.