ICICI Bank shares hit fresh high. Analysts see up to 21% further upside

Shares of ICICI Bank hit a record high in Tuesday's trade following the private lender's better-than-expected quarterly results. Analysts said the bank’s pre-provision operating profit (PPOP) beat their estimates, the net interest income  (NII) growth at 26 per cent YoY was highest among peers; credit growth was healthy at 22.7 per cent and net interest margin (NIM) came in at a multi-quarter high of 4.31 per cent.

Price targets on the stock suggests a potential 21 per cent upside ahead.

"We believe ICICI Bank 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 in a note.

The scrip rose 1.81 per cent to hit a high of Rs 942.70 on BSE.

ICICI Bank reported a 31.43 per cent rise in consolidated net profit at Rs 8,006.99 crore for the September quarter. Provisions for the quarter fell to Rs 1,644.52 crore compared with Rs 2,713.48 crore in the year-ago period.

"ICICI Bank reported another strong quarter, with NIM at 4.31 per cent and core pre-provision operating profit PPOP growth at 23.6 per cent YoY (5 epr cent above our estimate) owing to better NII/fee income and offset by higher expenses. Provisions declined 39 per cent YoY, of which contingent provisions were at 91 per cent. We think the trends have panned broadly in line with our expectations," said Nomura India while suggesting a target of Rs 1,060 on the stock.

With a floating rate book of 70 per cent, Motilal Oswal said, the bank is well-placed in a rising interest rate environment. The brokerage expects ICICI Bank to deliver a FY24E return on asset (RoA) and return on equity (RoE) of 2.1 per cent and 17.2 per cent, respectively. Motilal Oswal has a target of Rs 1,100 on the stock.

Nirmal Bang said ICICI's strong performance was led by robust credit growth, multi-quarter high margins and lower credit cost.

"Gross delinquencies declined sharply, leading to improvement in asset quality. We remain positive on ICICI Bank given its growth outlook and earnings trajectory," Nirmal Bang said while suggesting a target of Rs 1,144 on the counter.

PhillipCapital has a target of Rs 1,080 on the stock.

ICICI delivered a strong outperformance and the highest growth in NII among large banks, even on a high base.

Nuvama said it has maintained its 'buy' rating on the stock, given eight consecutive quarters of best-in-class earnings and said the NIM expansion likely to sustain. This brokerage has a target of Rs 1,020 on the stock

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