ICICI Bank market-cap hits Rs 6 trillion; stock rallies 26% in 2 months

Shares of ICICI Bank hit a record high of Rs 865.55, up 2 per cent on the BSE in Thursday’s intra-day trade, on strong growth outlook. The stock of the private sector lender surpassed its previous high of Rs 859.70 touched on October 25, 2021. In the past two months, the stock has rallied 26 per cent. While in the past one month, it has gained 12 per cent, as compared to 9.75 per cent rise in the S&PBSE Sensex.

ICICI Bank now joined the elite club of companies having market capitalisation (market-cap) of over Rs 6 trillion. At 11:00 am, with a market-cap of Rs 6.02 trillion, ICICI Bank stood at sixth position in the overall ranking.

For the April-June quarter of fiscal 2022-23 (Q1FY23), ICICI Bank had reported a 49.5 per cent year-on-year (YoY) rise in net profit at Rs 6,905 crore as a healthy increase in loan growth boosted the private bank’s bottomline. The bank’s net interest income (NII) grew 20.1 per cent YoY at Rs 13,210 crore. Net interest income is the difference between the interest earned and the interest expended. Net interest margin (NIM) was 4.01 per cent during the quarter under review, higher than 3.89 per cent the same time a year ago but largely flat from 4 per cent a quarter ago. Overall margin increased by 14bps YoY and 11bps QoQ. Besides higher growth in high yielding products, improving C/D ratio was also a key contributor.

The bank’s asset quality improved in Q1FY23 with gross and net non-performing asset ratios declining both on a yearly and a sequential basis. As on June 30, the gross NPA ratio was at 3.41 per cent versus 3.60 per cent a quarter ago and 5.15 per cent a year ago. The net bad loan ratio fell to 0.70 per cent as on June 30 from 0.76 per cent a quarter ago and 1.16 per cent on June 30, 2021.

Analyst at Nirmal Bang Equities see further scope for margin expansion on the back of room for improving the C/D ratio further, coupled with higher share of unsecured retail loans. The management sounded confident about credit demand but with a cautious undertone given the inflationary environment and global disturbances.

Asset quality improved QoQ; still, the bank has continued to shore up contingent buffers. Restructured pool has reduced further to 0.8 per cent. This was the second consecutive quarter when the bank has delivered 2 per cent ROA. We remain positive on the bank given its growth outlook and earnings trajectory, the brokerage firm said in result update.

Analysts at Emkay Global Financial services said ICICI Bank continues to outperform its large peers on core-profitability, led by better margins/fees and cost management, while lower LLP should boost its RoEs to a historical high of 17 per cent. Valuations remain reasonable at 2x FY24E ABV, stripping off subsidiaries’ value, the brokerage firm said  and retain Buy rating on the stock with a target price of Rs 1,025 per share.

Tech View

Bias: Positive

Target: Rs 898

Support: Rs 806

After consistently testing the higher end of the Bollinger Band (Rs 865) since July 7, shares of ICICI Bank managed to mildly break above the level in the intra-day trade today. If the stock manages to decisively close above this level, it may rise to Rs 883 and then Rs 898 level, as per the monthly Fibonnaci chart.

Further, the stock has been on a strong uptrend on the weekly chart, with the stock firmly sustaining above the higher-end of the Bollinger Band since July 18. The chart indicates that the trend shall remain positive as long as the stock holds above Rs 845.

In case of a downside, the daily chart shows immediate support at Rs 806, which is the stock's 20-day moving average (20-DMA). This will be followed by Rs 750, which is its 50-DMA.

The moving averages, along with momentum oscillators, suggest firm control of bulls, as per the daily charts. The stock has been in the overbought zone of the RSI indicator since July 20, yet it has managed to exhibit strength. Moreover, MACD line is also highlighting buyers' support. The Slow Stochastic indicator, however, indicates slower pace of the rally.

(With inputs from Nikita Vashisht)