ICICI Bank surges to lifetime high; here's why brokerages hiked their target price

Shares of ICICI Bank jumped over 8 percent on Monday hitting a lifetime high at Rs 823.40, after the private lender on Saturday reported a sequential improvement in its asset quality during the September quarter.

At 9:35 am, the stock was up 8.2 percent at Rs 821.60 on the BSE. The private lender reported a near 30 percent rise in its standalone net profit at Rs 5,511 crore for the quarter ended September. CNBC-TV18 Poll had predicted a profit of Rs 5,330 crore for the quarter under review.

Further, the net non-performing assets declined by 12 percent sequentially to Rs 8,161 crore on September 30, 2021, from Rs 9,306 crore on June 30, 2021. The net NPA ratio declined to 0.99 percent on September 30, 2021, from 1.16 percent on June 30, 2021.

"Right now we are very comfortable with the quality of the book that we have. The overall mix of our portfolio, a significant portion continues to be 'A' and above (rated) category at this point of time, more than 70 per cent of our book, 70.7 per cent is in A-minus and above category. On mortgages (loans), there is a fairly good mix, a lot of it comes from the retail (segment)," said Sandeep Batra, Executive Director, ICICI Bank.

ICICI Bank Q2 results: Net profit rises 30% to Rs 5,511 crore, net interest income rises 25%; beats estimates

Goldman Sachs, which has a 'buy' call on the banking scrip, has raised its target price to Rs 829 From Rs 773.  The brokerage has raised its profit estimates for FY22-24 by up to 5 percent and is likely to achieve a return on assets closer to 2 percent and a return on equity of 16.5 percent over FY23-25.

Like Goldman Sachs, CLSA has a 'buy' recommendation on the stock too.

CLSA has hiked its target price on the stock to  Rs 1,100 from Rs 1,000 and noted that the bank has now been consistently delivering the best growth in the sector.

Besides, Credit Suisse has raised its earnings per share estimates (EPS) by 6-9 percent for FY22-FY24 taking into account stronger net interest margins. It believes rising core profitability and lower credit costs are likely to drive the bank's return on equity higher, thereby increasing the target price to Rs 900.

Meanwhile, Morgan Stanley says ICICI Bank remains the top pick and has hiked its target price to Rs 1,025 from Rs 900 while having an 'overweight' call on the stock.