Even though the banking sector saw some pressure in today's trade (November 19, 2020) and resulted in sharp sell-off, this one private sector banking stock has just 'buy' recommendations, that said the bank has no 'sell' or 'hold' calls and in fact was amongst the top Diwali stock picks for the majority of analysts.
Yes, we are talking about none other than the country's second largest private sector banking player, ICICI Bank. For the past week, the stock had 28 'strong buy' and 17 'buy' recommendations but no 'hold', 'sell' or 'strong sell' ratings as per Reuters Eikon data.
Why such optimistic views on the ICICI Bank counter?
Robust earnings in Q2FY21:
Here are the key highlights from Q2FY21 which cannot be missed upon:
• Six fold jump in standalone net profit to Rs. 4251 crore
• Net NPA as on September 30 was at 1 percent which depicted improvement (if SC stay on NPA tagging was not there, NPA would have stood at 1.12 percent- this is still better than the figure of 1.23% for the June ended quarter
• Expansion in loan book y-o-y across categories such as retail, corporate.
• Fall in sequential provisioning
• loan disbursements at pre-Covid levels
• Strong growth in deposits of 20 per cent year-on-year
• Mortgage loan disbursal at the highest level in Q2
• Marginally better NIMs
Currently the scrip of ICICI Bank commands an attractive valuation which is at 1.4 times price to book, Abhimanyu Sofat, head of research at IIFL Securities said. He further added that in the current scenario it is the best bet in the banking sector. As of November 19, 2020, P/B value of ICICI Bank is 2.279.
Also as another rationale for the likely upside Sofat said that "It has not performed very well over the last decade. After the leadership change, there have been very positive ..
changes. Also, most subsidiaries are doing well. The stock seems poised to deliver gains from here".
Besides the Covid 19 impact for the bank has not been very ill and its penetration both in the retail as well as corporate side has augured well for the banker.
FII holding in the bank increased for three straight quarters
As per moneycontrol site, FII stake in the bank has been increasing for three consecutive quarters and as on August 2020 was at 44.89 per cent and other pattern that has come to notice is that Mutual funds have been lowering down their stake in the firm for past two quarters and as on August 2020, MFs holding in the bank stand at 27.46 per cent.