ICICI Bank among top Nifty 50 gainers after better-than-expected Q4 results, analyst sees 35% upside

JPMorgan is overweight on the bank and pointed out that core pre-provision operating profit (PPoP) in Q4 was driven by net interest margin expansion and loan growth.

The brokerage noted that almost the entire provision for the quarter was contingent in nature and that NIMs have likely peaked. ICICI Bank has built up enough buffer to support high-teens growth with stable return on ad spend (RoAs).

JPMorgan sees ICICI Bank as a steady low-risk compounding story delivering and expects a 16 percent consolidated EPS CAGR over the next two years with 17 percent RoE.

Bernstein is also overweight on the stock and has target price of Rs 1,000. It noted that the firm’s EPS growth was strong for the full year at 36 percent higher, largely led by the 31 percent growth in NII and a decline in provision expenses. The analyst said there is little to complain about this quarter except still weak deposit growth relative to its larger peer.

Jefferies, with a buy rating and target price of Rs 1,180, has raised earnings estimates by 5-9 percent as asset quality stays robust and 99 percent of credit costs were for buffer-building. Deposit growth was modest at 11 percent while loan plus investment rose by 18 percent as liquid assets and RIDF fell, the brokerage noted. It sees an uptick in deposit mobilisation as a plus and expects this to continue into FY24.

Goldman Sachs expects market share gains to continue with strong PPOP-ROA but believes core PPOP growth could likely slowdown in FY24 and FY25. It also highlighted that one of the reasons to take ICICI Bank off the conviction list recently even though it remains a buy.