Motilal Oswal has given Buy recommendation for ICICI Bank recommended buy rating on the stock with a target price of Rs 1100 in its research re with a target price of Rs. 1100 in its research report issued on Jan 17, 2022
Motilal Oswal’s research report on ICICI Bank
ICICIBC has been the best performer in the Banking sector (despite the consensus Buy tag) as it delivered 80%/42% returns over FY21/FY22 YTD. Its market capitalization ranking within the BFSI space has improved to two from five in FY18. Stability of the top management has helped improve its operational performance. Mr. Sandeep Bakhshi’s appointment as CEO has brought stability which enabled value creation and drove re-rating as bank delivered 31% CAGR in m-cap since FY18-21 v/s 7% over FY10-18. It has reported strong progression in NIMs, narrowing the gap with sector leaders. With a higher mix of floating rate loans and our view on a reversal in the rate cycle, we expect portfolio yields to remain steady, driving 20% CAGR in NII over FY21-24E. NNPA declined to sub-1% – the lowest level since Dec’14 while PCR has improved to ~80.3% – among highest in the industry. We estimate GNPA/NNPA ratio to moderate to 3.8%/0.7%, while Prov./PPOP ratio sustains ~25% over FY22-24E.
We expect it to deliver 18%/20% CAGR in loans/PPOP over FY22-24E, while RoA reaches the 2% milestone. We reiterate ICICIBC as our top Buy with a TP of INR1,100.