Buy ICICI Bank; target of Rs 1776: Deven Choksey

Deven Choksey's research report on ICICI Bank

For Q1FY26, the Net Interest Income (NII) grew by 10.1% YoY (+1.2% QoQ) to INR 429.6bn, above our estimates by 2.1%, led by higher NIM margins, partially offset by lower growth in advances. The Net Interest Margin (NIM) declined marginally by 7bps QoQ to 4.34%. NIM margin came-in above our estimates by 18bps led by the banks calibrated approach in passing on lower deposit rates to the investors. PPoP grew by 17.0% YoY (+6.1% QoQ) to INR 187.5bn, higher than the total operating income growth of 13.5% YoY, led by strong growth in non-interest income which grew by 21.5% YoY (+17.1% QoQ). Provisions came in at INR 18.2bn, up 36.2%YoY (+103.7% QoQ), due to lower base in Q1FY25. The net profit stood at INR 127.7bn, up 15.5% YoY (+1.1% QoQ), above our estimates by 5.2%, led by higher NII and non-interest income aided by improved treasury income.

Outlook

We value ICICI Bank’s standalone business at INR 1,576.0 per share, while we value its stake in its subsidiaries at INR 200.0 per share, with SOTP valuation target at INR 1,776.0 per share, implying potential upside of 23.1% potential upside. We reiterate our “BUY” rating on the stock.