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Private sector lender ICICI Bank’s share price soared 5.9% on Monday to hit an intra-day high of Rs 604.9 as investors reacted to the strong quarterly earnings growth. ICICI Bank said its net profit in the January-March quarter jumped 261% on-year basis and reached Rs 4,402 crore, meanwhile, operating profit was up 15.6% from the same period last year. Seeing the stellar rise in earnings, brokerage firms have increased their target prices for ICICI Bank, which leaves room for plenty of upside after today’s rally.
Loan growth for ICICI Bank was reported to be 14% on-year basis, showing a strong recovery. “The bank highlighted that loan disbursement in all retail products has crossed pre-Covid levels. Further, the digital capabilities of the bank are helping them in disbursing and underwriting various retail loans on a real-time basis,” Amit Capital said in a report. “The bank is well-positioned on capital and liquidity (Tier-1 of ~18%) and its industry-leading digital prowess means loan growth should be ~15% in the financial year 20222/23E each,” they added.
NPL ratio remained unchanged for ICICI Bank, despite the challenges posed by the covid-19 pandemic. “As we see in today’s results, ICICI Bank is reaping the benefits of taking a cautious approach to lending in recent years and correcting some of the underwriting issues that it has had in the past. With an excellent liability franchise and less risky corporate book, we see the bank riding on the back of solid performance on all metrics in the past few quarters,” Kotak Securities said in a note. The bank has a provision coverage ratio of 78% on NPAs.
ICICI Bank is seeing healthy issuance of credit cards and strong market share gains, according to Motilal Oswal. The bank’s management has said that only three corporate accounts were restructured during the previous quarter.
Analysts at Motilal Oswal have a ‘Buy’ call on the bank. “ICICI Bank reported a strong quarter, led by healthy business performance across all business segments,” they said while pinning a revised target price of Rs 750 per share on ICICI Bank. With best-in-class growth rates and comfort from a 1% Covid provisions buffer, Kotak Securities believes that the bank is well-positioned to deliver a closer-to-normalcy trend. The target price has been increased to Rs 710 per share by Kotak Securities. Analysts at Ambit Capital have the most bullish target price of Rs 760 per share on ICICI Bank.