ICICI Bank share price target revised up on 'best in class' Q2 results

ICICI Bank share: ICICI Bank saw sector-leading delivery across all parameters, placing it a cut above the rest of the sector, Nomura said

ICICI Bank share price: ICICI Bank has received share price target upgrade from brokerages after the private lender posted better-than-industry average results for the July-September quarter (Q2) of financial year 2024-25 (FY25).

 

They peg the bank's 2025 target price in the range of Rs 1,450 to Rs 1,575.

 

When it seems that the opportunities for positive surprises are exhausted, analysts at Motilal Oswal Financial Services said, ICICI Bank comes up with another ace up its sleeve, awing everyone with its superlative performance. 

 

"ICICI Bank has reported six glorious years of performance. The bank has consistently beaten Street estimates on one or the other metric, even as the macro environment changed considerably over the years," the brokerage pointed out as it maintained its 'Buy' rating and a target price of Rs 1,500 per share vs Rs 1,400 earlier.

 

 

On the bourses, ICICI Bank share price, on the National Stock Exchange (NSE), today rallied 3.1 per cent to Rs 1,294.5 per share in the intraday trade. By comparison, the benchmark Nifty50 index up 4 points (0.02 per cent) at 24,185 levels at 9:45 AM.

 

ICICI Bank results

At a time when other banks reported weak asset quality and higher slippages, Sandeep Bakhshi-led ICICI Bank reported improvement in non-performing asset (NPA) ratios. ICICI Bank's gross NPA (GNPA) ratio declined to 1.97 per cent in Q2 FY25 from 2.15 per cent in Q1 FY25. On a yearly basis, too, the ratio improved from 2.48 per cent in Q2 FY24. 

 

On similar lines, ICICI Bank's Q2 FY25 NNPA ratio stood at 0.42 per cent, down from 0.43 per cent seen in Q1 FY25 and 0.43 per cent at the end of Q2 FY24.

 

Gross slippages --  fresh NPAs being created during the quarter where a loan amount has not been paid for over 90 days -- were Rs 5,073 crore in the recently concluded quarter. This compares with Rs 5,916-crore slippage seen in Q1 FY25.

 

Recoveries and upgrades of NPAs, excluding write-offs and sale, were Rs 3,319 crore in Q2 FY25, compared Rs 3,292 crore in Q1 FY25. The bank wrote-off gross NPAs amounting to Rs 3,336 crore in the quarter.

 

"Slippage fell sharply from 2.1 per cent to 1.7 per cent. Ex-agri, too, the slippage ratio improved to 1.7 per cent from 1.8 per cent quarter-on-quarter (Q-o-Q). In the personal loan and corporate credit (PL+CC) segment, slippage had been rising over the last three–four quarters, which did not increase Q-o-Q in Q2 FY25. In addition, the bank has tightened underwriting and sourcing," highlighted analysts at Nuvama Institutional Equities. The brokerage expects the stock's premium to peers to expand.

 

Overall, ICICI Bank's net profit for the September quarter rose 14.5 per cent year-on-year to Rs 11,746 crore, beating Bloomberg's consensus estimate of Rs 10,952 crore.

 

Its net interest income (NII) increased 9.5 per cent Y-o-Y to Rs 20,048 crore, but net interest margin (NIM) contracted 9 basis points Q-o-Q to 4.27 per cent.

 

The bank's loan book grew 4 per cent Q-o-Q and 15 per cent Y-o-Y, while deposits expanded 5 per cent Q-o-Q and 16 per cent Y-o-Y during the period. It saw a growth of 4 per cent Q-o-Q in current account-savings account (CASA) deposits and 5 per cent Q-o-Q in term deposits (TDs). With this, the loan-to-deposit ratio (LDR) stood at 85.2 per cent at the end of Q2 FY25.

 

"ICICI Bank saw sector-leading delivery across all parameters (asset quality, loan and deposit growth, credit costs, and return ratio), placing it a cut above the rest of the sector. We revise our share price target to Rs 1,575 (vs Rs 1,420) and maintain 'Buy'," Nomura said.

 

ICICI Bank share target news, earnings upgrade

Against this backdrop, Nuvama Institutional Equities has upgraded the bank's net profit estimate for FY25 by 3.6 per cent and by 3.9 per cent for FY26. It reiterated its 'Buy' rating with a higher target price of Rs 1,470, valuing the stock at 2.8-times book value as per FY26 earnings estimates. Its previous target price was Rs 1,450.

 

"A steady mix of high-yielding portfolio (PL, CC, Business Banking) and broad based growth across product lines are enabling profitable growth while maintaining healthy business diversification. We increase our earnings per share (EPS) estimates by 2.8 per cent for FY25 and 1.8 per cent for FY26," said those at MOFSL.

 

Nomura has increased its FY25-27 EPS estimates by 2-3 per cent and expects ICICI Bank to deliver sector-leading 2.3 per cent return on asset (RoA) and 18 per cent return on equity (RoE) over the same period.