Motilal Oswal has given Buy recommendation for ICICI Bank recommended buy rating on the stock with a target price of Rs 1050 in its research r with a target price of Rs. 1050 in its research report issued on Aug 17, 2022
Motilal Oswal’s research report on ICICI Bank
ICICIBC’s Annual Report reaffirms our view that the bank is progressing well in its endeavor to strengthen its Balance Sheet, with a strong focus on the Retail franchise. While the Retail portfolio has been leading the overall loan growth, the SME and Business Banking portfolio grew 39% YoY in FY22 and constitutes 11% of total loans. Growth has been driven by InstaBIZ and Merchant Stack tools, which have improved operational efficiency and removed bottlenecks. The bank has one of the highest proportions of Retail deposits, with a strong CASA mix. Savings accounts per branch improved to INR664m in FY22 v/s INR461m in FY20, indicating higher productivity at the branch level. This has aided the 59bp YoY decline in the cost of deposits to 3.5% in FY22. The concentration of the top 20 advances/exposures improved by 193bp/244bp to 11.8%/12% in FY22. On the liability side, concentration of the top 20 depositors improved further by ~12bp to 5.3%. GNPAs improved aided by controlled slippages and healthy recoveries, and effective monitoring systems. We expect GNPA/NNPA to moderate to 2.4%/ 0.5% by FY24 and credit cost to undershoot its long-term trends.
With asset quality holding strong, loan growth getting broad-based, and margin likely to improve, aided by the recent RBI rate hikes, we estimate RoA/RoE to improve to 2.1%/17.1% by FY24. We maintain our Buy rating with a SoTP-based TP of INR1,050 (2.8x FY24E ABV). ICICIBC remains our preferred play in the sector.