Buy ICICI Bank; target of Rs 400: KRChoksey

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26 Aug, 2025 12:21

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  KRChoksey's report on ICICI Bank
ICICI Bank’s Q1FY16 PAT was reported at Rs 2,976 crs up 12.1% Y-o-Y & 1.9% Q-o-Q, in line with our expectation. Key highlights are: 1) NII grew by 13.9% Y-o-Y & was flat Q-o-Q aided by fairly stable margins and healthy loan growth 2) Non-interest income depicted a slow growth of 4.9% Y-o-Y and declined by 14.5% sequentially. The growth was supported by healthy fee income growth (+9.0% y/y) and dividend from subsidiaries as trading gains were subdued during the quarter 3) Operating expense grew by 8.6% Y-o-Y on account of existing branch operating expenses as branch addition remained low 4) Asset quality was fairly stable; the bank saw fresh slippages to the tune of Rs 1,672 crs compared to Rs 3,260 crs in Q4FY15. During the quarter, restructured book increased to 3.2% of loans vs 2.8% in the previous quarter primarily due to front-loading of loans which were to be restructured before Q1FY16 5) Life insurance saw strong growth in APE (+38.1% Y-o-Y), improvement in NBP margins (300 bps Y-o-Y & 260 Q-o-Q) with PAT of Rs 397 crs. General insurance business picked pace during the quarter (14.9% Y-o-Y; 28.7% Q-o-Q) while PAT declined sequentially to Rs 116 crs (-59.3% Q-o-Q; +61.1% Y-o-Y) 6) Consolidated PAT grew by 14.1% Y-o-Y supported by life & general insurance businesses earnings, stable earnings by capital market linked business and steady growth in parent banking business.

"ICICI Bank has continued to deliver consistent core operating performance despite a slow economic environment. Healthy loan growth, strong margins, stable asset quality and healthy CASA are key highlights from the result although a slowdown in other operating income was a dampener. We reiterate the bank’s strong core operating metrics, leading ICICI Bank to march towards return path of 1.9% RoA and 15.4% RoE. A recent correction in the stock price leaves more room for upside from the current level and making risk-reward favorable. Hence, we recommend BUY rating on the stock with TP of Rs 400", says KRChoksey research report.

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