What should investors do with ICICI Bank post Q3 result: buy, sell or hold?

Profit increased to Rs 4,939.6 crore in Q3FY21, rising from Rs 4,146.5 crore in the corresponding period last fiscal.

February 01, 2021 / 09:38 AM IST
 
 
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ICICI Bank share price added 4 percent in the early trade on February 1 after the private sector lender reported a 19.1 percent year-on-year growth in standalone profit for the quarter ended December 2020, driven by operating income and NII.

Thecompnay's profit increased to Rs 4,939.6 crore in Q3FY21, rising from Rs 4,146.5 crore in the corresponding period last fiscal, the numbers released on January  30 showed.

Net interest income, the difference between interest earned and interest expended, rose by 16 percent to Rs 9,912.5 crore compared with the year-ago quarter, with 10 percent loan growth (YoY at Rs 6.99 lakh crore) and 10 bps contraction in the net interest margin.

Also Read - ICICI Bank Q3 profit grows 19% to Rs 4,939.6 crore, NII up 16%

Here is what some brokerages have to say about the stock and the company after the Q3 numbers:

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Prabhudas Lilladher

ICICI Bank reported strong earnings of Rs 49.4 billion (PLe: Rs40.9 billion) led by an all-round performance in core operations and slightly lower provisioning. Asset quality on pro forma basis was quite steady with controlled slippages, maintained PCR of 77 percent and restructuring of 40bps of loans. BB & below-rated book saw an increase from 2.4 percent to 2.6 percent, though overlap with proforma NPA or restructuring kept stress at similar levels.

Collection efficiency improved, especially in retail with overdue less than 90dpd was 1 percent compared to 4 percent as higher part post morat ending has moved to either restructuring or NPA. We retain buy with a revised target price of Rs 630 from Rs 616 based on 2.0x Mar FY23 with tweaks to loan growth/fees & slightly lower slippages

Yes Securities

Our earnings and ABV estimates for FY22/23 undergo a material upgrade, as we raised loan growth assumption and pruned credit cost forecast. We now expect the bank to deliver average 1.7 percent RoA and 14-15 percent RoE over FY22-23 with high capitalisation levels.

The core bank trades at 1.6x FY23 P/ABV, attractive in a scenario of improving growth and strong profitability. Retain buy and raise 12 months target price to Rs 675, as we also assign a better multiple now.

Dolat Capital

The bank is well poised to deliver a 1.5-1.6% RoA, led by its improving operating metrics, increased confidence on asset quality along with high standard provision buffers, and best in class liability profile. Tweaking our forward estimates marginally, we maintain our buy recommendation on the stock with a SOTP-based target price of Rs640, valuing the standalone bank at 2.2x Dec-22E book, which including the value of subsidiaries implies 2.6x P/ABV.

Motilal Oswal

ICICI Bank reported a strong 3QFY21, led by robust operating performance, while strong asset quality trends enabled a decline in provisioning expenses. Loan growth is showing a strong revival in both wholesale and retail, with disbursement in many business segments surpassing pre-COVID levels. Asset quality remains under control, with controlled slippages and total restructuring at 0.4 percent of loans. We expect RoA/RoE to improve to 1.8 percent/15.2 percent for FY23E. Maintain Buy with a revised SoTP-based target price of Rs 700 a share (2.4x Sep-22E ABV for the bank).

At 0918 hours, ICICI Bank was quoting at Rs 554.35, up Rs 17.35, or 3.23 percent, on the BSE.

The share touched its 52-week high of Rs 561 on January 13, 2021 and a 52-week low of Rs 269.00 on March 24, 2020. It is trading 1.19 percent below its 52-week high and 106.08 percent above its 52-week low.

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Moneycontrol News
first published: Feb 1, 2021 09:38 am

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