Buy ICICI Bank; target of Rs 1120: Dolat Capital Market

Dolat Capital Market's research report on ICICI Bank

ICICI reported a strong set of numbers with 35 bps sequential expansion in NIM to 4.65%, PPoP growth of 31% YoY, and RoA of 2.2%. This was despite additional contingent provisions of Rs15bn during the quarter (Rs40.5bn in 9MFY23). Loan growth at 4% QoQ/ 20% YoY was broad-based, with healthy sequential growth across retail (4.5%), SME (8%), and domestic corporate (4.7%). Deposits growth was muted at 3% QoQ/10% YoY, partly as the bank did not resort to CDs as yet owing to excess liquidity. Asset quality metrics continued show strength with moderation in headline ratios and negative credit costs ex of contingency and conservative provisions, benefitting from recoveries from WO corporate accounts.

Outlook

Earnings have been tweaked marginally factoring in higher near term NIM, increased opex, and lower fee lines. Maintain BUY with a SOTP based TP of Rs 1120, valuing the standalone bank at 3x Sep-24E book. The bank stands out for its superior liability mix and strong digital capabilities, along with consistent improvement in core operating metrics.

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