ICICI Bank share price has been the best performer in the banking sector as it delivered 80 per cent, 42 per cent returns (YTD) over FY21 and FY22, respectively, according to Motilal Oswal Institutional Equities. The stock is likely to rally further on the back of strong industry position, robust digital expansion and steady asset quality. While the stock has corrected nearly 2% in the past five days, it has rallied over 13% in a month, and over 22.8% in the last six months. ICICI Bank share price has surged more than 230% in the last five years.
Motilal Oswal expects the private lender to deliver 18%/20% CAGR in loans/PPOP over FY22-24E. The brokerage firm maintained a ‘buy’ rating on the stock with a target price of Rs 1,100 per share. ICICI Bank shares on Wednesday were quoting at Rs 807.35 apiece, down 2.15% on BSE. The stock touched an intraday high of Rs 820 apiece and an intraday low of Rs 803 apiece. In the previous trading session, ICICI Bank shares closed down at Rs 823.35. The stock touched its 52-week high Rs 859.70 and 52-week low Rs 512.10 on 25 October and 28 January, 2021, respectively. Currently, it is trading 6% below its 52-week high.
ICICI bank: BUY
Target price: Rs 1,100
ICICI Bank’s market capitalization ranking within the BFSI space has improved to two from five in FY18, according to the Motilal Oswal report. Stability of the top management has helped improve the lender’s operational performance. Additionally, Sandeep Bakhshi’s appointment as CEO has also brought stability which enabled value creation and drove re-rating as the bank delivered 31 per cent CAGR in m-cap since FY18-21 v/s 7 per cent over FY10-18, it said.
“ICICI Bank has been reporting a robust performance, led by strong core PPOP, controlled provisions, and steady asset quality. A healthy mix of the high yielding portfolio (Retail/Business Banking) and a low cost liability franchise is aiding margin expansion. The bank is witnessing strong recovery across key segments such as Retail, SME, and Business Banking. We estimate ICICI Bank to deliver 20% CAGR in PPOP over FY22-24E, while RoA reaches the 2% milestone. It has a strong capitalization with a Tier I of 17.3%, which will support healthy loan growth. We reiterate ICICIBC as our top Buy in the sector with a TP of INR 1,100 (2.9x FY24E ABV for the core bank),” said analysts at Motilal Oswal Financial Services.
Growth trends getting broad-based
The lender has seen steady growth of 17% (CAGR) in its retail portfolio over the past three years which has enabled 12% growth in overall loans. With the mix of overseas books declining to 5% and the outlook on corporate loan growth improving, Motilal Oswal estimates ICICI Bank to deliver 18% CAGR in loan growth over the next two financial years. Separately, the lender has been consistently strengthening its digital capabilities, and has been reporting strong growth in retail advances, supported by an impressive share of digital originations. The bank’s digital disbursals in home, personal and auto loans have thus grown by 2.5x, 1.7x, 4.2x YoY respectively over YTD Oct’21.
ICICI Bank m-cap in private banking space likely to go up
ICICI Bank’s share in total m-cap of banks under the brokerage firm’s coverage has risen to 20% from 11% in FY18. The private lender’s share in profitability within the private banks space has risen to 23.3% in FY21 from 12.2% in FY19. Its market share in loans has also gone up to 18.6% from 17.6% over a similar period. The lender is expected to deliver 28% earnings CAGR over FY21-24E, which will enable its continued outperformance vs. its peers. Also, it will further raise ICICI Bank’s m-cap contribution in the private banking space.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)
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