According to Moneycontrol's Analyst Tracker, ICICI Bank has bagged around 48 'buy' calls from brokerages and only 3 'hold' calls in April.
ICICI Bank's net interest income climbed 19.5 percent year-on-year (YoY) to Rs 74,305 crore in FY24, from Rs 62,128 crore in FY23.
Analysts at Bernstein shared a 'market perform' rating (a neutral rating) on ICICI Bank, with a target price of Rs 1,150 per share.
Analysts at Bernstein said that this premium valuation enjoyed by ICICI Bank compared to its peers was justified as the lender maintained a healthy RoA of 2.36 percent.
So far this year, ICICI Bank's shares have surged over 13 percent, outperforming the 1 percent gain in the benchmark Nifty 50 index during the same period.
So far this year, ICICI Bank shares have surged over 13 percent, outperforming 1 percent gain in the benchmark Nifty 50 index during the same period
At a time when HDFC Bank is navigating merger challenges and Kotak Mahindra Bank is rectifying discrepancies in its digital lending business, the Street has selected ICICI Bank as the flavour of the season in the private banking space this April.
According to Moneycontrol's Analyst Tracker, ICICI Bank has bagged around 48 'buy' calls from brokerages and only 3 'hold' calls in April. This picture is in contrast to India's largest private lender — HDFC Bank, which received 45 'buy' calls and 5 'hold' ratings last month.
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Strengthening balance sheet
As ICICI Bank reported another strong quarterly show, brokerages maintained their bullish stance on the lender and raised their target prices.
Analysts at Geojit Financial Services put out a 'buy' call on ICICI Bank, with a target price of Rs 1,274 per share, citing the bank's sustained growth momentum in advances and deposits driven by its technological prowess and extensive reach.
"Positive triggers such as healthy asset quality, adequate capitalisation, and digital transformation augur well for the bank’s future performance," they wrote in a post-result analysis.
Prabhudas Lilladher, too, gave a 'buy' call on ICICI Bank given its improved in balance sheet, and raised the target price to Rs 1,450 per share from Rs 1,300.
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ICICI Bank's share of retail and SME loans increased to 75.4 percent in FY24, while its loan-to-deposit ratio reduced to 83.8 percent, and liquidity coverage ratio stood strong at 123 percent.
"This helps us arrive at a return on asset (RoA) and return on equity (RoE) of 2.1 percent and 17.2 percent, respectively, for FY26E, which is best-in class," analysts at Prabhudas Lilladhersaid.
ICICI Bank's net interest income climbed 19.5 percent year-on-year (YoY) to Rs 74,305 crore in FY24, from Rs 62,128 crore in FY23. Its profit-after-tax (PAT) also jumped 28.2 percent YoY to Rs 40,888 crore in FY24, from Rs 31,896 crore in the year-ago period.
Margin pressures to reduce
While a higher cost of funds continues to haunt the margins of major banking and financial firms, analysts believe that ICICI Bank's margin drag was limited in Q4 due to ultra-low credit costs versus peers.
Analysts at Bernstein shared a 'market perform' rating (a neutral rating) on ICICI Bank, with a target price of Rs 1,150 per share. They said that another quarter of low credit costs helped offset a marginal decline in NIMs (net interest margin).
The management said there would be a gradual improvement in the NIM in the upcoming quarters.
ALSO READ: ICICI Bank Q4 Results: Net profit jumps 17% to Rs 10,707 crore, asset quality stays healthy
"We expect margins to remain under pressure in the near-term due to deposit re-pricing, but the bank remains committed to offset this with higher yielding segments, keeping margins rangebound," the management explained.
ICICI Bank's NIMs contracted by 33 basis points (bps) YoY to 4.6 percent, from 5 percent in the year-ago period. Sequentially, too, NIMs were down 14 bps from 4.8 percent in Q3FY24.
Attractive valuations pave the way for re-rating
Currently, ICICI Bank trades at 17.7 times its price-to-earnings (PE) ratio, slightly above Kotak Mahindra's 17.7X PE and HDFC Bank's 17.1 X PE. However, it remains expensive compared to the sector's mean of 11.18X PE.
Analysts at Bernstein said that this premium valuation enjoyed by ICICI Bank compared to its peers was justified as the lender maintained a healthy RoA of 2.36 percent.
JP Morgan's analysts see further scope for upward re-rating amid better growth prospects. "We believe the valuation is still reasonable at 13X FY26. We upgrade ICICI Bank's FY25/26 EPS by 4 percent," the brokerage firm added, giving the bank an 'overweight' rating and a target price of Rs 1,300 .
So far this year, ICICI Bank's shares have surged over 13 percent, outperforming the 1 percent gain in the benchmark Nifty 50 index during the same period.
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