ICICI Q2 cheer: Experts see rerating; NIMs at peak

ICICI Bank has reported a 20.2 percent year-on-year rise in net profits to Rs 2,352 crore, a stellar performance considering the last six quarters of sub-5 percent GDP growth.

The bank not only managed to improve its asset quality but also logged in higher net interest income (NII) that increased 20 percent on yearly basis to Rs 4,043 crore (USD 646 million), slightly higher than analysts' expectations.

The bank’s net interest margin (NIM) improved marginally year-on-year (up 31 basis points on sequential basis) to 3.31 percent.

So, what are the brokerages saying?

Vaibhav Agrawal of Angel Broking says the net interest income came of India's second largest private bank in better than their estimates. "The net profit is in-line but higher than the market estimates. Again, we have to see how much that was due to volatility, forex and treasury in this quarter. On the asset quality (side), it is better than estimates. Looking at the numbers, they would have benefited from the volatility on assets and treasury during the quarter," he adds

Despite the good show, shares of ICICI Bank remained unaffected.

Reason being?

Rajiv Mehta of IIFL says most banking stocks have already rallied about 10-15 percent.

"At the same time, we are nearing also the monetary policy. So that is why the overall stance of the market remains cautious and they just want to get some more clarity in terms of where the interest rates are heading as also with some more macro numbers to come through," he adds.

Will the stock be rerated now?

Hatim Braochwala of Karvy Stock Broking says this is likely.  “Our earlier price target is Rs 1,190. We would now try to even evaluate our projections and maybe move it slightly upwards,” he adds.

Is ICICI poised to outperform in Q3 too?

The answer, according to Broachwala is no. He believes the stocks NIMs have peaked now and expect more or less the same results in Q3. I don’t expect a significant outperformance from PSU or private banks,” he adds further.