ICICI Bank shares set for rally ahead? Stock price targets after Q2 beat

Following a slew of weak quarterly results this earnings season, ICICI Bank Ltd sprung positive surprises, leading to upward revision in its target prices. Analysts said the private lender beat the Street estimates on most counts, be it asset quality, deposit growth, net interest margin (NIM) or the-best-in-class return on asset (ROA), and that it is set for a rerating ahead.

ICICI Bank logged a very strong set of Q2FY25 numbers and lower sequential slippage even as peers battled a slowdown in growth and increase in credit cost, said Nuvama Institutional Equities. It said ICICI Bank's strong loan growth of 4 per cent QoQ and 15 per cent YoY, decline in lagged slippage to 1.7 per cent from 2.1 per cent, controlled opex and a decline in credit cost were the key Q2 positive highlights.

Core pre-provision operating PPoP grew 7 per cent QoQ or 13 per cent YoY, among the highest in the sector.

"ICICI’s results are isolated from sector pressures of deposit growth and deteriorating asset quality. Sustained focus on granularity and quality assets have made ICICI’s balance sheet strong enough to deliver strong and consistent results every quarter since FY21. We reiterate it as our top sector pick. Our target price is Rs 1,470/2.8x BV FY26E (earlier Rs 1,450)," Nuvama said.

MOFSL said ICICI Bank has reported six "glorious years of performance" since Sandeep Bakhshi took charge as MD & CEO on October 15, 2018. The bank has consistently beaten the Street estimates on one or the other metric, even as the macro environment changed considerably over the years, the brokerage said.

"We increase our EPS estimates by 2.8 per cent/1.8 per cent for FY25/FY26 and estimate RoA/RoE of 2.19 per cent/17.4 per cent in FY26. Reiterate Buy with an SoTP-based target price of Rs 1,500 against Rs 1,400 earlier," it said.

PL Capital said ICICI Bank remains an industry best performer and that a re-rating is due.

While the unsecured pool is seeing stress across the system, the bank’s portfolio has performed better in H1FY25 compared to large private peers as reflected in best-in-class provisions of 43 bps against the private peers' 50-78 basis points, PL Capital said.

"Hence, provisions over FY24-27E may be lower at 40-50 bps (peers 50-65bps). The bank is consistently delivering on protecting core PPoP as the softer NIM environment is being countered by cost control measures. Core RoA of 2.1 per cent is the best in class. Keeping multiple at 3 times, we raise target price to Rs 1,640 from Rs 1,520 as we roll forward to Sep’26 core ABV. Reiterate ‘Buy," PL Capital added.

ICICI Bank reported a 14.47 per cent jump in net profit at Rs 11,746 crore against Rs 10,261 crore in the year-ago quarter, boosted by treasury gains. Net interest income (NII) for the quarter rose 9.5 per cent year-on-year to Rs 20,048 crore from Rs 18,308 crore YoY. Net interest margin (NIM) for the quarter stood at 4.27 per cent against 4.36 per cent in the June quarter and 4.53 per cent in the year-ago quarter.

ICICI Bank: Nirmal Bang said the lender's reported Q2 profit was above its and consensus estimates by over 7 per cent each. NII growth was in line with its estimates but PPoP came in 4 per cent above estimates, it said.

"We have valued ICICI Bank at 2.9 times September 2026E ABV, which results in a standalone value per share of Rs 1,344. Adding subsidiary value per share of Rs 201, we derive a target price of Rs 1,545 against Rs 1,544 earlier. Our target multiple is at a 10 per cent premium to the past 5-year average multiple of 2.6 times, which adequately captures an earnings CAGR of 12.7 per cent over FY24-FY27," Nirmal Bang said.

This brokerage said ICICI Bank's earnings will be driven by loan CAGR of 15.1 per cent, NIM of 4.2 per cent, stable opex ratios and average credit cost of 58 basis points, thereby leading to average RoA of 2.3 per cent during FY24-FY27, Nirmal Bang said while suggesting a ‘Buy’ on the stock.