Moneycontrol Bureau
Goldman Sachs has upgraded ICICI Bank to buy from neutral following recent underperformance, with the stock having fallen 7-20 percent over the last 3-6 months and underperforming the Sensex. It has set a target price of Rs 340 indicating 27 percent upside potential.
The brokerage expects the private lender to grow its retail loan book by 21.4 percent CAGR FY15-FY18, and loan growth by 16.6 percent, higher than industry. "It continues to focus on margin which will likely remain stable as the bank increases its retail book proportion and sees the benefit of deposit re-pricingof the last year reflect in its average cost of funds," Goldman Sachs says in a note.
According to Goldman Sachs, while earnings growth will be muted in FY16, strong growth is seen at 21 percent in FY17-18 due to improving macro which should drive the top-line and stable NPL provisions.
However, the brokerages feel higher non-performing loans (NPLs) remain a concern given the still weak macro, structural issues in the infrastructure space and significant correction in the commodity sector. These may lead to asset quality remaining under stress for some time.
Meanwhile, Goldman Sachs has also upgraded other private banks Axis Bank, YES Bank and Kotak Mahindra Bank. Looking for a 13 percent upside, the brokerage has set a target price of Rs 562 per share on Axis Bank with a buy rating.
YES Bank is upgraded to buy and add it to the conviction list with a reduced target price of Rs 890 per share.
The brokerage has removed Kotak Mahindra from Asia Pacific sell list and uogarded it to neutral from sell. It has a target price of Rs 646 per share.Posted by Nasrin SultanaFollow @NasrinzStory
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