On Monday, Citi updated its stance on ICICI Bank, raising its price target to INR1,600 from INR1,547, while reiterating a Buy rating for the stock. The revision follows ICICI Bank's recent earnings report, which showed a robust return on assets (RoA) of 2.4% and return on equity (RoE) of 18%.
The bank's performance has been notable for its resilient asset quality, with slippages at 1.7% and credit costs below 40 basis points, both showing improvements quarter over quarter.
The bank's asset quality outperformed its peers, with no signs of alarming stress anticipated. ICICI Bank also experienced a slight net interest margin (NIM) contraction of 9 basis points, bringing it down to 4.21%. However, net interest income (NII) remained in line with expectations. The bank has provided guidance for stable NIMs in the second half of the year.
ICICI Bank's deposit and loan growth rates, at 5% and 4% quarter over quarter respectively, have surpassed those of its competitors. A significant part of this growth was attributed to the bank's business banking sector, while personal lending saw moderate increases. The bank's focus on operating efficiency and cost optimization has borne fruit, as evidenced by a 7% year-over-year and flat quarter-over-quarter operating expense growth.
Citi has factored in these positive developments, leading to a 2% increase in its earnings forecast for ICICI Bank for the fiscal years 2025 to 2027. The new price target of INR1,600 assigns a 3.2 times multiple to the bank's estimated book value for the banking business in the fiscal year 2026.
Citi's analysis underscores ICICI Bank's consistent performance and resilience, suggesting the bank is on a path to achieving a higher valuation and endorsing it as a "top pick" in the sector.
In other recent news, ICICI Bank has been the subject of several analyst updates. HSBC (LON:HSBA) raised its price target for the bank to INR1,520, citing the bank's strong performance and its subsidiaries' growing value. This new price target indicates a potential 21% upside from the bank's current trading price.
Similarly, Kotak maintained a Buy rating for ICICI Bank, with a price target of INR1,400, highlighting the bank's robust performance and successful operational strategy.
ICICI Bank has also reported a significant increase in its consolidated profit after tax, according to its recent filing with the U.S. Securities and Exchange Commission.
The bank's profit under Indian GAAP rose to Rs. 44,256 crore (US$ 5,310 million) in fiscal year 2024, while under U.S. GAAP, net income increased to Rs. 61,376 crore (US$ 7,365 million). The bank's stockholders’ equity stood at Rs. 310,990 crore (US$ 37.3 billion) according to U.S. GAAP.
In other analyst notes, Axis Capital (NYSE:AXS) Limited adjusted its stance on ICICI Bank from 'Buy' to 'Add' due to consistent earnings growth. Meanwhile, Jefferies and CLSA maintained 'Buy' ratings, highlighting the bank's robust deposit growth, operational strategies, and commitment to environmental, social, and governance standards, respectively.
In other company developments, ICICI Bank has seen changes in key management positions and is considering raising funds through the issuance of debt securities.
InvestingPro Insights
ICICI Bank's strong performance, as highlighted in Citi's analysis, is further supported by real-time data from InvestingPro. The bank's market capitalization stands at an impressive $107.92 billion, reflecting its significant presence in the banking sector. This aligns with the InvestingPro Tip identifying ICICI Bank as a "Prominent player in the Banks industry."
The bank's P/E ratio of 18.98 suggests a reasonable valuation, especially considering its robust growth. InvestingPro data shows a remarkable revenue growth of 24.62% over the last twelve months, with an even stronger quarterly growth of 27.37%. This growth trajectory supports Citi's positive outlook and increased price target for the stock.
InvestingPro Tips also reveal that ICICI Bank has raised its dividend for 4 consecutive years, with a current dividend yield of 0.68%. This consistent dividend growth, coupled with the bank's strong financial performance, underscores its appeal to both growth and income-focused investors.
For readers interested in a deeper analysis, InvestingPro offers 7 additional tips for ICICI Bank, providing a more comprehensive view of the company's financial health and market position.
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