Buy ICICI Bank; target of Rs 1550: Motilal Oswal

Motilal Oswal's research report on ICICI Bank

ICICIBC has delivered a robust ~17% CAGR in loans over FY22 to FY24, driven by Retail, Business Banking and SME segments while leveraging data analytics for onboarding and credit assessment. Business Banking segment continues to witness strong traction even as the overall economic environment has softened, as the bank has revamped its strategy, enhanced resources and streamlined internal processes. As a result, the segment has posted ~30% YoY growth in 2QFY25. Overleveraging remains a concern for the industry mainly in unsecured lending segments and the unwinding process is ongoing, which may take a few more quarters and continue to put pressure on the segment’s growth in the near term. The bank continues to focus on risk management, especially in unsecured lending, and has tightened underwriting standards, which resulted in slower growth in these segments. We estimate ICICIBC to deliver a 17% CAGR in its loan portfolio over FY24-27E.

Outlook

We estimate ICICIBC to achieve a CAGR of 15%/12% in PPoP/PAT over FY25-27E, leading to RoA/RoE of 2.1%/16.7% in FY27. ICICIBC remains our top buy in the sector and we reiterate our BUY rating with a TP of INR1,550, based on 2.7x Sep’26E ABV.