ICICI Bank share price rises 2% post robust Q3 show; JPMorgan raises target

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ICICI Bank share price rose nearly 2 percent in the early trade on January 27 after the company posted a robust set of numbers in the quarter ended December 2019.

The company registered a healthy 158.4 percent year-on-year (YoY) growth in Q3FY20 profit at Rs 4,146.46 crore from Rs 1,604.91 crore in the same period last year.

NII during the quarter grew by 24.3 percent YoY to Rs 8,545.32 crore with loan growth at 13 percent YoY (to Rs 6.35 lakh crore) and 37 bps improvement in net interest margin.

Total deposits increased by 18 percent to Rs 7.16 lakh crore, wherein CASA deposits grew 15 percent and term deposits grew 24 percent YoY.

Asset quality improved sequentially with gross non-performing assets (NPAs) as a percentage of gross advances falling 42 bps to 5.95 percent and net NPA declining 11 bps to 1.49 percent in the quarter ended December 2019.

JPMorgan has maintained an overweight rating on the stock and raise target price to Rs 650 from Rs 560 per share.

According to JPMorgan, the headline Q3 print was mixed, while operating profit was strong and recoveries have improved.

The slippage & BB book increase proved to be asset quality headwinds, while domestic loan/deposit growth offset by a higher slippage.

The cumulative 9-month slippage of 2.1% is still well within our tolerance limit and FY21/22 EPS estimates are increased 1.4%/4.5%, said JPMorgan.

Motilal Oswal reiterated buy with SOTP-based target price of Rs 650 per share.

The bank has delivered a strong operating performance and is showing healthy signs of earnings normalisation. It is progressing well in its endeavour to strengthen its balance sheet with a strong focus on core PPoP, said Motilal Oswal.

While its retail portfolio has been growing well, growth in business banking and SME is accelerating strongly and will further propel overall loan growth. We believe the bank is well placed in a challenging environment with its limited exposure to the newly surfaced stressed names and one of the highest coverage in the banking sector. We thus estimate RoA/RoE at 1.7%/16.8% in FY22, brokerage firm added.

At 09:21 hrs, ICICI Bank was quoting at Rs 540.00, up Rs 6.05, or 1.13 percent on the BSE.