Analysts upbeat on ICICI Bank shares, may touch Rs 400

Market experts are bullish on ICICI Bank shares. On April 28, the share price of ICICI Bank jumped 8 per cent to Rs 326.65.

According to market experts, the stock rallied on the back of better-than-expected Q4 performance.

For the quarter ended March 2015, the bank registered consolidated net profit of Rs 3,252.47 crore, up 13.20 per cent, against Rs 2,873.27 crore in the corresponding quarter a year ago. The bank announced its quarterly numbers on April 27.

At 14.4 per cent (YoY), ICICI Bank's credit grew faster than deposits at 8.9 per cent YoY, with its domestic credit-to-deposits up 500 basis points YoY to 83.8 per cent.

Net interest income stood at Rs 5,079 crore which was up by 16.6 per cent YoY and 5.6 per cent QoQ, on the back of better net interest margins and healthy loan growth.

Asset quality continued to be under stress during the quarter as gross non-performing asset (NPA) rose by 75 points year-on-year (YoY) to 3.78 percent and net NPA jumped by 64 basis points (YoY) to 1.61 per cent to due to higher restructured assets.

Of the total slippages to NPA of Rs 3,260 crore, Rs 2,246 crore slipped from restructuring book (Rs 776 in Q3 FY15) while the remaining were fresh NPAs. Management guides lower slippages in the coming year with normalised credit costs.

According to a research report by Emkay Global Financial Services, domestic credit to register a 17.5 per cent annualised growth during 2013-14 to 2016-17. International loans are expected to grow much slower, at a pace of around 12 per cent annually over FY15-17.

The bank's profitability over 2014-15 and 2016-17 to be robust, with a 1.8 per cent return on assets (RoA), led by robust business growth, better net interest margins and stable credit costs. The share price of the company can touch Rs 400 in the next few quarters.

Meghna Luthra, associate research analyst,  KR Choksey Shares & Securities in a research report, says, "ICICI Bank has continued to deliver consistent core operating performance, albeit some stress witnessed in asset quality, largely attributable to slow in economic environment.

Strong margins, stable fee income growth and controlled costs in the last quarter of 2014-15 reiterate the bank's strong core operating metrics, leading ICICI Bank to march towards return path of 1.9 per cent RoA and 15.4 per cent RoE (return on equity).

A recent correction in the stock price leaves more room for upside from the current level and making risk-reward favourable. Hence, we recommend buy rating on the stock with a target price of Rs 400."

Since the beginning of the ongoing calendar year, the share price of ICICI Bank has corrected around 7.5 per cent till April 28.

According to a research report by IIFL Institutional Equities, the stock as the bank's inherent strengths remain intact and it would be a major beneficiary of an economic revival. Its share price can touch Rs 380 in the next 12 months.

ICICI Bank is India's second-largest bank and the largest among private-sector banks, with loan book size of Rs 3.4 lakh crore in 2013-14. It enjoys around 5.4 per cent market share in system loans as on March 2014.