Trading 7% Near To Its 52-Week High, Buy This NIFTY Bank Stock For Good Gain

Axis Securities has issued a buy recommendation on ICICI Bank's stock, with a target price of Rs. 990. The stock was trading at a market price of Rs. 800.50 on NSE as of Jan 25, 2022 16:00:00 IST, and the brokerage expects the stock to hit its target price, resulting in a gain of 23.75 percent. According to the NSE, the stock hit a 52-week high of Rs 867.00 and a 52-week low of Rs 512.00 on October 25, 2021 and January 28, 2021, respectively. It is now trading 7.72 percent lower than its 52-week high and 56.25 percent higher than its 52-week low.

Key Result Highlights of ICICI Bank According To Axis Securities

• Net investment income (NII): NII was up 23.4%/4.7% YoY/QoQ to Rs 122.4 Bn led by healthy loan growth and stable net interest margin (NIM) (3.97% vs. 4% QoQ).
• Loan book: Advances grew 16.4%/6.4% YoY/QoQ. Domestic loan book was up 18% YoY w/w Retail/Business Banking/SME/Wholesale grew 19%/39%/34%10% YoY.
• Deposits: Deposits grew 16.4%/4.1% YoY/QoQ led by 20%/25% YoY growth in savings/current account while term deposits grew 12% YoY. The average CASA ratio improved by ~80bps QoQ to 45%.
• Non-interest income: Non-interest income was up 6.4%/4% YoY/QoQ to Rs 49.9 Bn led by fee income which was up 19%/13% YoY/QoQ to Rs 42.9 Bn.
• Operating Expenses (Opex): Total Opex increased by 22.4%/7.6% YoY/QoQ, employee expenses rose 27.4%/4.2% YoY/QoQ and other expenses rose 19.9%/9.6% YoY/QoQ. C-I marginally increased to 41.1% from 39.6%/39.9% YoY/QoQ.
• Pre-provision operating profit (PPOP): PPOP was up 15.1%/2.4% YoY/QoQ to Rs 101.5 Bn. Core PPOP was up by 24.9%/5.7% YoY/QoQ to Rs 100.6 Bn.
• Asset quality: Provisions were down 26.8%/26% YoY/QoQ. Credit costs have declined further to ~1% from 1.4%/1.6% QoQ/YoY. G/NNPA ratio improved further by 69/14bps QoQ to 4.13%/0.85%. Slippages moderated to Rs Rs 40.2 Bn (ratio ~2%. PCR remains robust at 80%. Restructured loans stood at ~1.2% of loans at Rs 96.8 Bn (similar to Q2FY22).

Buy With A Target Price of Rs 990/share

Axis Securities has said in a report that "The management continues to focus on achieving growth in core operating profit in a risk calibrated manner through the focused pursuit of target market segments. It guided for continuity in its NIM target of ~3.9-4.0%. The bank has ~38% book linked to the repo and 7% linked to other external benchmarks. The unutilized Covid-19 buffer is at 0.7% while provisions on restructured loans are at 25% (20% in Q3FY21)."

According to the brokerage "ICICIB has been clocking in better performance than its peers. Higher loan growth, improving core operating profits as well as asset quality trends, and a strong provision buffer coupled with a stable deposit franchise will help the bank expand its ROAE/ROAA over FY22-24E. We maintain a BUY rating on the stock with a revised target price of Rs 990/share (SOTP basis core book at 2.8x FY24E and Rs 182 Subs. Value), implying an upside of 23% from the CMP."

Disclaimer

The stock has been picked from the brokerage report of Axis Securities. 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.