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Jefferies India has raised its target price on ICICI Bank on expectations of improved growth in India’s largest private sector lender.
It raised the target price on the bank to Rs1,315 from Rs1,230, an increase of around 7%, in a report entitled, ‘Profitable Growth is Back.’
“…we think lack of growth has been the biggest deterrent to a re-rating in the past, and this trend could reverse in FY14."
"….Capital repatriation from foreign subsidiaries is a work-in-progress…and is beneficial for consolidated RoE(Return on Equity),” said the report dated 29th April authored by Equity Analyst Nilanjan Karfa.
The report noted that though weak loan growth may have caused weakness in the stock after earnings, it believed that the bank will be able to deliver 20% loan growth on the back of a 25% expansion in retail assets in FY14. It noted that competitive intensity may hit increase in net interest margins(NIM), while retail loan growth may help fee-based income growth.
“…we remain cautious on sharp NIM expansion as domestic competitive intensity remains high. Fee income which saw low single digit growth, is guided to grow in double digits — low teens at best in our opinion, driven by an improvement in retail loan growth…,”said the report.
ICICI Bank was trading at Rs.1143.45 at the time of writing, down 0.09% over the previous session’s close on the National Stock Exchange.
