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What should investors do with ICICI Bank post Q2 earnings: Buy, sell or hold?

Net interest income, the difference between interest earned and interest expenses, has grown to Rs 11,690 crore in Q2FY22, against Rs 9,366.09 crore with double digit loan growth.

October 25, 2021 / 10:33 AM IST
 
 
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ICICI Bank share price touched a 52-week high of Rs 835 in early trade and then later got locked in 10 percent upper circuit, intraday on October 25 after the company reported healthy numbers in the quarter ended September 2021.

ICICI Bank on October 23 recorded profit after tax of Rs 5,511 crore for the September 2021 quarter, increasing significantly compared to Rs 4,251.33 crore in the corresponding period previous fiscal.

Net interest income, the difference between interest earned and interest expenses, has grown to Rs 11,690 crore in Q2FY22, against Rs 9,366.09 crore with double digit loan growth.

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Here is what brokerages have to say about the stock and the company post September quarter earnings:

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Credit Suisse

The research firm has kept outperform call. It raised the target price to Rs 900 and also raised FY22-24 EPS estimates by 6-9% on stronger NIMs.

The rising core profitability coupled with lower credit costs drive up the RoE, while CET remains strong at > 17% & will allow for continued growth.

Credit Suisse expect credit cost to normalise & RoE rise to 15%+.

Goldman Sachs

Research house has maintained buy call and raised the target to Rs 829 from Rs 773 after company’s PAT was in-line, while underlying quality & future visibility were better.

It increases FY22-24 profit estimates by up to 5% after bank delivered a return on assets of 1.8% this quarter.

The company is set to achieve RoA at closer to 2% & RoE of 16.5% over FY23-25.

CLSA

Broking house CLSA has maintained buy call and raised the target price to Rs 1,100 from Rs 1,000 as bank now consistently delivering sector-best growth.

The recent asset quality trends indicate credit costs will likely undershoot. With further 3%-5% earnings upgrade, it expect return on risk-weighted assets.

Morgan Stanley

The brokerage house has kept overweight call and raised the target to Rs 1,025 from Rs 900 as company remains a top pick.

The net impaired loan formation dropped sharply & core PPoP was a surprised. The traction on various digital initiatives remains strong.

Motilal Oswal

ICICI Bank reported a strong 2QFY22, led by strong core PPOP performance, controlled provisions, and robust asset quality, with NNPA ratio (less than 100bp) at the lowest level since Dec’14.

The bank is seeing a strong recovery in business trends across key segments such as Retail, SME, and Business Banking. The Retail and Rural segment is showing robust trends, barring Commercial Vehicles.

On the asset quality front, slippages have moderated, and the management expects 2HFY22 to be much better. Provision coverage ~80% remains the best in the industry.

We maintain our buy rating with a revised SoTP-based target price of Rs 1,000/share (2.8x Sep’23E ABV for the bank). ICICI Bank remains our top pick in the sector.

Elara Capital

Back to back strong earnings over the last four quarters give us the confidence that strong traction in loans, NIM, fees is sustainable.

We increase earnings by 11-13% and revise our target multiple to 3x from 2.8x. Our new target price is Rs 1,000.

We expect RoA of 1.9% in FY23E for ICICI Bank versus 1.8% in Q2FY22. With strong traction in earnings, focus on granular growth and improving digital footprint, we expect the stock to re-rate to 3x PBV.

LKP Research

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

We value the standalone entity with 3.4xFY23E BVPS (Rs 267) and of investment in subsidiaries and JVs (Rs 113 per share); we arrive at a revised target price of Rs 1,020 (Rs 780 earlier). We recommend buy rating with a potential upside of 34%.

At 10:27 hrs ICICI Bank was quoting at Rs 835.00, up Rs 75.90, or 10 percent on the BSE.

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: Oct 25, 2021 09:32 am

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