Buy ICICI Bank; target of Rs 1500: Sharekhan

Sharekhan's research report on ICICI Bank

Core operating profits grew by 12% y-o-y /4% q-o-q (better than estimates) led by better loan growth, strong fee income and contained opex growth. Credit cost stayed lower at 39 bps annualised vs 44 bps q-o-q and 21 bps y-o-y resulting in steady RoA at 2.4%. Bank is reasonably confident of reporting a 40-50 bps credit cost on an overall basis as risk is still within internal estimates despite increase in delinquencies and credit costs in unsecured retail segment in the last 3-4 quarters, resulting in stable asset quality. NIMs declined by 9 bps q-o-q to 4.27% (on expected lines). NIMs are expected to be stable in H2 vs H1 untill rate cut cycle starts. Loans and deposit growth was healthy at ~15% y-o-y/16% y-o-y respectively.

Outlook

The bank is relatively well-positioned as it continues to outperform peers on most of the parameters exhibiting strong franchise strength and thus current valuation premium to peers is likely to sustain. We maintain a Buy with a revised PT of Rs. 1,500. Stock trades at 2.6x/2.2x its FY2025E/FY2026E core BV estimates.