Buy ICICI Bank; target of Rs 1500: KR Choksey

KR Choksey's research report on ICICI Bank

ICICI Bank delivered a healthy quarter with stable asset quality. Net interest income (NII) grew 9.5% YoY (-11.3% QoQ) to INR 200,480 Mn in Q2FY25. NII was 1.6% higher than our estimates. The net interest margin was 4.27% in Q2FY25 compared to 4.53% in Q2FY24 (vs. 4.36% in Q1FY25). Pre-Provision Operating Profit (PPOP) for Q2FY25 grew 17.5% YoY (+4.4% QoQ) to INR 167,232 Mn. The profit after tax surged 14.5% YoY (+6.2% QoQ) to INR 117,459 Mn in Q2FY25. With consistent growth in its loan and deposit portfolios, especially in high-margin retail and SME segments, ICICIBC has solidified its position in the competitive Indian banking sector. We raise our P/ABV multiple of the standalone banking business to 2.8x (earlier 2.6x) to the FY26E ABV of INR 462.9 per share on the back of the strong balance sheet and improving growth trajectory of its core segments.

Outlook

This implies a SOTP valuation of INR 1,500 per share (earlier INR 1,430), representing a potential upside of 16.0%. Accordingly, we maintain our "BUY" rating on shares.

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