Morgan Stanley feels ICICI Bank's core earnings compounded annual growth rate is likely to top 20 percent over FY19-21 on stronger asset growth and net interest margin.
Global brokerage house Morgan Stanley has maintained overweight call on ICICI Bank, the country's largest price sector lender and hiked price target to Rs 510 from Rs 460 earlier that implies 34 percent potential upside from Tuesday's closing levels.
"Asset quality continues to improve, and underlying earnings are accelerating," it reasoned.
Not only ICICI but across banking sector asset quality was the biggest concern which impacted their earnings. The bank has undergone massive positive change over the last 3-4 years. Its CASA is now highest in the industry at 51 percent reflecting the strong liability franchise.
With RBI's move to resolve NPA cases on fast track has been reflecting in their stock prices. The stock gained 0.8 percent to hit record high of Rs 383.35 in morning on Wednesday. It rallied 41 percent in last six months.
Morgan Stanley feels core earnings compounded annual growth rate is likely to top 20 percent over FY19-21 on stronger asset growth and net interest margin.
"Valuation is attractive and foreign ownership remains at 15-year low," it said.
At 10:09 hours IST, the stock was quoting at Rs 381.70, up Rs 1.50, or 0.39 percent on the BSE.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.