What should investors do with ICICI Bank after Q4 numbers—buy, sell or hold?

The private sector lender clocked a 260.5 percent year-on-year growth in standalone profit at Rs 4,402.61 crore. NII grew by 16.9 percent to Rs 10,431.13 crore in Q4FY21 compared to Rs 8,926.9 crore in Q4FY20.

April 26, 2021 / 10:31 AM IST
 
 
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ICICI Bank share price added 6 percent in the early trade on April 26 after the company announced its fourth-quarter earnings.

The private sector lender on April 24 clocked a 260.5 percent year-on-year (YoY) growth in standalone profit at Rs 4,402.61 crore for the quarter ending March 2021.

The profit in the corresponding period in the previous year stood at Rs 1,221.4 crore.

Net interest income (NII), the difference between interest earned and interest expended, grew by 16.9 percent to Rs 10,431.13 crore in Q4FY21 compared to Rs 8,926.9 crore in the year-ago period.

Also Read: ICICI Bank Q4 profit spikes 261% to Rs 4,403 crore, net interest income grows 17%

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Here is what brokerages have to say about the stock and company after Q4 earnings:

Morgan Stanley | Rating: Overweight | Target: Rs 850

The FY21 saw strong PPoP and resilient asset quality despite COVID-19. The second COVID wave appears to be manageable. The earnings estimates remain unchanged as we build offset from high excess provisions.

Credit Suisse | Rating: Outperform | Target: Raised to Rs 660

The capital levels are strong with growth picking up and healthy pre-provision profitability. Increases EPS estimate by 2-3 percent on stronger growth and NIM.

Kotak Institutional Equities | Rating: Buy | Target: Rs 710

The company reported 3.6x YoY earnings growth on the back of 16 percent operating profit growth. There was a solid recovery in loan growth at 14 percent  YoY and a healthy NIM profile at 3.7 percent.

Unchanged NPL ratio despite FY21 being a challenging year, while return to normalcy on return ratios is now a high probability.

Also read our in-house research team's analysis of ICICI Bank's results here.

JPMorgan | Rating: Overweight | Target: Rs 675

The asset quality delivered a positive print with gross NPLs down 50 bps. The restructured book was just 0.5 percent of advances. There was a positive print across the board on loan, deposit growth and core PPoP.

CLSA | Rating: Buy | Target: Raised to Rs 825

CLSA increases earnings by 4-6 percent factoring in better growth and NII. The company is the new growth leader among large banks and its rerating cycle should continue.

Prabhudas Lilladher | Rating: Buy | Target: Rs 700

The bank reported a miss on earnings of Rs 44 billion (PLe: Rs49.5 billion) largely due to additional contingent provisions of Rs 10 billion to remain conservative given the emerging second wave

Strong provision buffer of 100bps and PCR at 77 percent should help credit cost normalise much faster, leading to ROEs moving to 15 percent by FY23 from the current 13 percent.

Motilal Oswal | Rating: Buy | Target: Rs 750

ICICI Bank reported a strong quarter, led by healthy business performance across all business segments. Strong operating performance was aided by healthy NII growth (17bp NIM expansion), though weak other income affected net earnings.

The bank has delivered double-digit RoE (~12.6 percent) for the first time post FY17 and we expect RoA/RoE to improve to 1.7 percent/15.2 percent in FY23E.

Sharekhan | Rating: Buy | Target: Rs 800

Healthy capital levels (CET-1 at 16.8 percent) and provision buffers indicate balance-sheet strength. We have increased the earnings forecast for FY2022E and FY2023E, factoring in better growth and lower credit risk burden. The improving granularity of the book provides better earnings visibility for ICICI Bank.

Dolat Capital | Rating: Buy | Target: Rs 700

A sharpened focus on ecosystem banking and strengthening balance sheet with a declining share of overseas loans and reduced asset quality risks have aided core profitability metrics. RoA at 1.5 percent for Q4FY21 despite nil treasury gains, no utilisation of earlier contingency buffers, and after making Rs 10 billion of additional provision buffers indicates that return ratios are looking up.

LKP | Rating: Buy | Target: Rs 703

We expect the bank's loan book to grow cautiously at CAGR of 16 percent over FY21-23E, led by balanced growth across segments. In our opinion, the bank's credit cost will normalise by FY22E and estimate return ratio ROA/ROE of 1.6 percent and 13.6 percent in FY22E.

At 0922 hours, ICICI Bank was quoting at Rs 595.40, up Rs 25.35, or 4.45 percent on the BSE

The share touched a 52-week high of Rs 679.30 on February 16, 2021 and and a 52-week low of Rs 285.70 on May 22, 2020. It is trading 12.35 percent below its 52-week high and 108.4 percent above its 52-week low.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Apr 26, 2021 09:44 am

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