ICICI Bank shares gain in weak market post strong Q4 result; brokerages see up to 43% upside

ICICI Bank: In an otherwise negative market, shares of ICICI Bank gained around 2 per cent to become a top gainer intraday on both the benchmark indices – Sensex and Nifty50 – after reporting above expectations March quarter results for the financial year 2021-22 (Q4FY22).  

The stock touched a day’s high level of Rs 761.5 per share on the BSE as compared to a 0.64 per cent fall in the S&P BSE Sensex at around 10:36 AM. 

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India’s second-largest private lender ICICI Bank on Saturday reported a 59 per cent year-on-year (YoY) jump in profit to Rs 7,019 crore in Q4FY22, helped by a sharp decrease in the money set aside for bad debts. While it ended FY22 with a 44 per cent growth in the bottom line at Rs 23,339 crore. 

Its core net interest income grew 21 per cent during the quarter at Rs 12,605 crore on the back of an over 17 per cent increase in advances and a widening of the net interest margin to 4 per cent as against 3.84 per cent in the year-ago period. 

Maintaining a Buy stance, YES Securities mentioned ICICI Bank takes on the mantle of stability champion and sets a price target of Rs 1043 per share, which implies upside of almost 40 per cent from Friday’s closing price. 

The brokerage highlighting the key points said, “Management commentary alludes to continued healthy loan growth trends in retail, SME and business banking. While management stated that it aims to maintain margin, we think improving loan mix should aid piecemeal margin enhancement.” 

Another brokerage firm Nirmal Bang sees a relatively lower share of unsecured products as one of the key levers for NIM expansion going forward, while asset quality improved further with the GNPA (gross non-performing assets) ratio declining on the back of higher recoveries and upgrades.  

On account of the positive asset quality outlook, the brokerage expects credit costs to continue to trend down. And, it raised earnings estimates by 3 per cent, expecting ZROEs of 15-16% over FY23-24E with a BUY rating and target price of Rs 1,068 apiece, an upside of 43 per cent.