The share price of ICICI Bank jumped over 2 percent on Monday to cross the Rs 500-mark for the first time since March after the positive management commentary and RBI’s move to ensure liquidity in the banking system while keeping interest rates low to support growth.
The stock gained as much as 2.7 percent to Rs 515.60 per share on the NSE. At 10:56 am, the shares traded 1.4 percent higher at Rs 509.25.
Brokerages have raised their target prices on the private lender in view of its sustainable growth, adequate investment in the digital platforms and improved return ratios.
At the analyst meeting on Friday, the bank showcased its digital strategy of each business segment while reiterating its narrative of ‘One Bank, One RoE and One KPI (key performance indicator)’.
According to CLSA, the bank has been successful in improving the granularity and the quality of earnings over the past 5-7 years and as business volume and credit costs normalise post Covid-19, the bank remains well-positioned to deliver steady core PPOP growth.
Therefore, the brokerage lifted its target price on ICICI Bank to Rs 625 from Rs 560 earlier.
Motilal Oswal placed the highest target price at Rs 630, saying that the bank is one of the top picks in the BFSI space. “ICICI Bank is gaining market share with strong risk control. It is firmly placed to deliver healthy sustainable growth. Thus, we expect RoA/RoE of 1.7 percent and 15.2 percent respectively, for FY23,” said the brokerage.
Jefferies also maintained a ‘buy’ rating with the target price increased to Rs 600 from Rs 570 per share.
The brokerage said that the bank is approaching clients with product suites.”The business is improving and the provisions are also adequate. We expect earnings recovery from FY22 with improved growth and lower credit costs,” added the report.
Nirmal Bang explained that the bank’s current non-NPA provisions are adequate. “Besides the standalone entity, the subsidiaries have immense growth opportunities in their respective industries. From a long-term perspective, the subsidiaries are overall franchise value enhancers. Hence, we raise our price targets to Rs 590 from Rs 568 apiece.”
Prabhudas Lilladher’s preferred pick from the banking sector is ICICI Bank. It feels that it’s digital adoption is already providing results in retail banking. “We see sustained double-digit return ratios by FY23,” said the brokerage. It raised its target price to Rs 614 on the stock from Rs 520 earlier.
Dolat Capital also hiked their target prices to Rs 585 while Ambit Capital raised it to Rs 570. Emkay Research increased its target on the bank to Rs 600.