ICICI Bank: Brokerages remain bullish on stock post Q4 earnings; raise target price

On Friday after market hours, the financial institution reported robust efficiency within the fourth quarter of fiscal yr 2024 (4QFY24), with a 17% year-on-year (YoY) enhance in web earnings. This development was pushed by wholesome development in web curiosity earnings (NII), managed working bills, and managed credit score prices. 

The financial institution achieved an annualized Return on Belongings (RoA) of two.4% and a Return on Fairness (RoE) of 18.5%. For the complete fiscal yr FY24, Revenue After Tax (PAT) reached ₹408.9 billion, marking a 28.2% YoY enhance.

The financial institution’s Internet Curiosity Margin (NIM) grew by 8% YoY, supported by a strong 16.2% YoY (2.7% quarter-on-quarter, QoQ) enhance in loans. Nevertheless, NIMs moderated barely by 3 foundation factors (bp) QoQ to 4.40%. 

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Different earnings elevated by 11% YoY however decreased by 7% QoQ to ₹56.5 billion, primarily as a consequence of robust development in core charges (13% YoY) offset by modest treasury positive factors at ₹2.8 billion.

When it comes to enterprise enlargement, advances grew by 16.2% YoY (2.7% QoQ), pushed by development in retail, enterprise banking (BB), and small and medium-sized enterprise (SME) loans. Inside the retail phase, there was wholesome development in housing, rural, and unsecured credit score (private loans and bank cards), in keeping with Motilal Oswal. 

The proportion of unsecured loans elevated to roughly 14.2% of complete loans. SME lending expanded by 25% YoY, whereas BB loans grew by 29% YoY.

Now we have compiled brokerage rankings and opinions on ICICI Financial institution’s This autumn numbers, as outlined beneath.

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JM Monetary 

The brokerage is assured that ICICI Financial institution is well-positioned to realize a median Return on Belongings (RoA) of +2.3% and Return on Fairness (RoE) of 18.5% over the estimated interval of FY25–26. 

This optimistic outlook is supported by the financial institution’s robust asset high quality, sustained development trajectory, though margins are anticipated to barely ease. ICICI Financial institution persistently outperforms its bigger personal sector counterparts when it comes to returns, which the brokerage anticipates will assist keep its premium valuation.

Following the financial institution’s numbers, JM Monetary maintains its goal worth of ₹1,330 and maintains a ‘Purchase’ score on the inventory. This goal worth signifies an upside potential of 20% from the inventory’s earlier closing worth of ₹1,107. 

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Systematix Institutional Equities 

Systematix expects the financial institution’s margin impression to be average in comparison with its earlier estimates because of the financial institution’s capacity to move on charges mirrored in largely secure spreads and the administration’s give attention to sustaining pricing self-discipline. 

The brokerage has diminished its estimates for charge earnings as a consequence of slower enterprise development in sure retail segments, similar to private loans (PL). Nevertheless, this discount is offset by decrease working bills. Moreover, the brokerage has revised down its estimates for credit score prices, reflecting the financial institution’s sustained asset high quality.

General, Systematix has adjusted its Revenue After Tax (PAT) estimates for fiscal years 2025 and 2026 by 5%, leading to a 10-basis level (bps) enchancment in Return on Belongings (RoA). It maintains its ‘purchase’ score on the inventory and has raised the goal worth to ₹1,275 per share, indicating an upside rally of 15.17%.

“In our view, a tad greater a number of can be justified contemplating that enormous peer personal banks face idiosyncratic points like HDFCB with its merger-related uncertainties, Kotak with its ongoing regulatory scrutiny, and Axis with development headwinds. ICICI Financial institution stays our most popular choose,” stated Systematix.

Vintage Inventory Broking

Vintage Inventory Broking acknowledged that ICICI Financial institution maintains its observe report of strong efficiency, boasting a superior Return on Belongings (RoA), robust asset high quality, and a stable steadiness sheet. In distinction to earlier expectations, the Internet Curiosity Margin (NIM) is anticipated to stay elevated, leading to a 4% improve for FY25 and a -2% adjustment for FY26 because of the potential for softer NIMs ensuing from a delayed charge minimize cycle.

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The brokerage highlights that the financial institution has established strong buffers, which might safeguard or clean earnings even within the occasion of an opposed macroeconomic setting. It anticipates a RoA of two.2% for FY25 and a couple of% for FY26, together with a Return on Fairness (RoE) of 17% for FY25 and 16% for FY26.

The brokerage additionally maintained a ‘purchase’ score with a revised worth goal greater to ₹1,300 apiece.

Motilal Oswal 

The financial institution continued its regular efficiency within the newest quarter, propelled by strong Internet Curiosity Earnings (NII) and disciplined administration of working bills and provisions, supported by wholesome asset high quality. The balanced composition of its portfolio, with a give attention to high-yielding segments similar to retail and enterprise banking, alongside sustained development in enterprise banking (BB), small and medium-sized enterprises (SME), and secured retail loans, has fostered widespread enlargement, making certain a resilient diversification of its enterprise.

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Whereas the speed of Internet Curiosity Margin (NIM) decline slowed down (3 foundation factors QoQ), ongoing stress on funding prices could persistently hold margins at decrease ranges. Nonetheless, enhancements in asset high quality have led to additional reductions in gross non-performing asset (GNPA) and web non-performing asset (NNPA) ratios.

The extra provisioning buffer (equal to 1.1% of loans) presents further reassurance. Motilal has raised its earnings per share (EPS) estimates by 2% for FY26, with minor changes to its FY25 projections, anticipating Return on Belongings (RoA) and Return on Fairness (RoE) of two.26% and 18.0%, respectively, in FY26.

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The brokerage anticipates the financial institution will keep a CAGR of round 14% in revenue after tax (PAT) from FY24 to FY26E. It has reaffirmed its ‘Purchase’ advice on the inventory, setting a revised worth goal of ₹1,300.

Equally, CLSA has upheld its ‘purchase’ score and raised the goal worth to ₹1,350 per share. JP Morgan maintains an ‘obese’ stance on ICICI Financial institution, with a goal worth of ₹1,300, whereas Nomura, the Japanese brokerage agency, additionally maintains its ‘purchase’ score with a goal worth of ₹1,335 per share.

Disclaimer: The views and proposals given on this article are these of particular person analysts. These don’t symbolize the views of Mint. We advise buyers to examine with licensed consultants earlier than taking any funding choices.

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Printed: 29 Apr 2024, 10:25 AM IST