ICICI Bank remains a top stock pick after strong Q3, brokerages see strong rally

Market


ICICI Bank on Saturday reported an over 34% jump in its net profit at 8,312 crore in December 2022 quarter on a consolidated basis, helped by an overall healthy performance. ICICI Bank shares rose more than a per cent to 883 apiece on the BSE in Monday’s opening deals. 

The bank posted a deposit growth at a slower 10.3% amid the ‘war for deposits’ in the system, and the management pointed out to comfortable levels on liquidity coverage when asked about the divergence.

“Higher earnings growth was delivered by Home Finance, whereas Pru Life and Securities lagged. Asset quality stays robust & bank beefed up reserves. We raise estimates & keep ICICI Bank among our top-picks,” said brokerage Jefferies which has a Buy tag on the bank stock and a target price of 1,150.

ICICI Bank yet again reported beat on profitability, led by strong growth, superior margin delivery, and contained opex. Unlike other banks, ICICI continues to build contingent buffer to smoothen its profitability trajectory and help absorb any futuristic asset-quality hiccups, as per analysts at Emkay.

“We believe ICICI is best placed among large PVBs to deliver growth and absorb any macro/asset-quality shock, given healthy provisions/capital buffers. Thus, we expect the bank to deliver the best-ever RoA/RoE of 2.1-2.2%/17-18% over FY23-25E because of strong margins and lower LLP,” the note stated.

ICICI remains its top stock pick in the banking space, given its superior financial performance, top-management stability/credibility, and strong capital/provision buffers. Emkay has retained its BUY rating with a revised target price of 1,250/share.

“ICICI bank reports another strong and steady financial performance, with NIM surprising positively. The improvement in unit level profitability driven by rising margin; lower acquisition / servicing cost and better credit behaviour have resulted in market share gain for the bank. We believe ICICIBC is best placed among peer banks given its strong digital capabilities to underwrite loan at accelerated pace. With strong balance sheet and capital position, the bank is geared to capitalise growth opportunity in the system,” said PhillipCapital which has a target price of 1,110 on the stock.

The views and recommendations made above are those of individual analysts or broking company, and not of Mint.


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