Buy This Largecap Banking Stock, Balance Sheet Remains Fortified

Broking firm, Prabhudas Lilladher has suggested buying the stock of ICICI Bank, with a price target of Rs 1090 on the stock.

ICICI Bank saw a stable quarter with core PAT being higher by 1.6%. Better loan growth and NIM was partly offset by opex miss. As per the bank, opex might remain elevated as healthy revenue profile provides headroom to invest in business. Loan growth QoQ was largely led by retail while corporate and BuBalso saw traction. NIM rose by 19bps QoQ to 4.76% due to slower rise in costof funds. TD grew by 4.3% QoQ and management stated that RTD rates have accelerated in last few weeks which may boost RTD flows.

"Hence funding cost may rise at a faster pace in coming quarters which may arrest the rate of NIM increase. Led by lower slippages GNPA reduced by 17bps QoQ to 3.2% and buffer provisions of Rs15bn were created taking its total pool to Rs100bnor 1.5% of RWA. Rolling forward to Sep'24 core ABV, we maintain multiple at 3.0x and raise SOTP based target price from Rs 950 to Rs 1090. Retain Buy" Prabhudas Lilladher has said in its report.

Core earnings tad higher led by better NIM

According to the brokerage, NII was a beat at Rs 147.9 billion (est. Rs145bn) led by slightly better loan growth and NIM. Loan growth was 22.7% YoY (PLe 22%) while deposit accretion was 11.5%YoY (PLe 11%). NIM(calc.) was 4bps higher at 4.76% (PLe 4.72%), +19bps QoQ led by lower rise in CoF which came in at 3.95%. Other income was higher at Rs50.5bn (Ple Rs46.6bn) led by dividend income while treasury saw a loss of Rs0.85bn. Opex was a miss at Rs81.6bn (PLe Rs80.2bn) as other opex was higher. PPoP was 116.8bn (PLe Rs111.4bn), +17.8% YoY. Core PPoP was Rs111bn higher by 2.5%. Asset quality was better with GNPA/NNPA reducing by 17bps/8bps QoQ to 3.24%/0.6%. Provisions were Rs16.4bn (PLe Rs15bn). PAT was a beat at Rs75.6bn (est. Rs72.5bn) while core PAT at Rs71.25bn was higher by 1.6%