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On Monday, CLSA analyst Piran Engineer increased the price target on ICICI Bank (ICICIBC:IN) (NYSE: IBN) to INR1,700 from the previous INR1,600, while continuing to recommend an Outperform rating for the stock. The revision reflects the bank’s strong performance in the recent quarter, with both pre-provision operating profit (PPOP) and profit after tax (PAT) surpassing CLSA’s estimates by 8% and 11%, respectively. The stock, currently trading at $33.22, sits near its 52-week high of $33.52, with a market capitalization of $118.11 billion.
ICICI Bank’s latest financial results highlighted a strategic focus on profitability, which resulted in a higher net interest margin (NIM) of 15 basis points quarter over quarter. This improvement was noted despite a moderated loan growth, shifting from mid-teens to low-teens. Even after adjusting for one-time factors and accounting adjustments, the NIM would have still increased by 6-7 basis points, leading to a net interest income (NII) beat. The bank’s impressive performance is reflected in its 40.52% revenue growth and strong YTD return of 11.25%. According to InvestingPro data, analysts maintain a strong buy consensus with a rating of 1.25.
The bank’s operational expenses (Opex) also showed positive results, aligning with the management’s previous year’s guidance that projected Opex growth to be lower than loan growth for the fiscal year 2025. This has been achieved, as per the analyst’s commentary.
Asset quality for ICICI Bank remained robust, with improved slippage ratios and the added benefit of a recovery from one corporate account. Engineer noted that these factors contributed to the bank’s solid quarterly performance.
Based on these results, CLSA has decided to maintain its estimates for ICICI Bank largely unchanged. The firm has rolled forward its valuation to March 2027, which is the basis for the increased target price of INR1,700. The Outperform rating has been reaffirmed, suggesting CLSA’s continued confidence in the bank’s ability to outperform the market. The stock currently trades at a P/E ratio of 19.77, which InvestingPro analysis suggests is high relative to its near-term earnings growth potential.
In other recent news, ICICI Bank has been affirmed with a Buy rating by BofA Securities, maintaining a price target of $35. The analyst made minor adjustments to the bank’s earnings per share estimates, altering them by 1-2%, but highlighted that the price target remains unchanged. ICICI Bank’s valuation is currently at 2.3 times the FY26E standalone price-to-book ratio, which the analyst sees as an attractive risk-reward balance. The bank has achieved key successes, including improved cost efficiency, with a cost-to-income ratio reduced to 38.5% and a low credit cost of 37 basis points. Fee income grew robustly by 16% year-over-year, despite a slowdown in loan growth to 13-14%.
The bank experienced a slight slowdown in balance sheet growth, with loan growth declining to 13.5% year-over-year. Unsecured retail loans grew by 10% year-over-year, but this was offset by strong growth in business banking and corporate lending. Deposit growth was softer, showing a 1.5% quarter-over-quarter increase and a 14% year-over-year increase. However, the current account and savings account book showed more robust growth, with a 1.1% quarter-over-quarter and 16.6% year-over-year increase, which is favorable for the bank’s net interest margin.
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