ICICI Bank share price jumps 5.7% on strong Q3 results; brokerages increase target price

ICICI Bank shares were among the top performers on Monday morning.

ICICI Bank share price surged 5.7% to hit a 52-week high of Rs 568.35 per share today morning. The jump in the stock price comes days after the lender reported a 19% on-year growth in net profit to Rs Rs 4,950 crore in the fiscal third quarter. ICICI Bank, along with other banks, was going strong as Sensex and Nifty traded with gains on Monday morning. Helped by ICICI Bank’s jump, the Bank Nifty index too was seen trading higher — up 1.35%, outperforming the benchmarks. Bank Nifty has continued to surge higher for the last few trading sessions.

Provisions reduce on-quarter

ICICI Bank’s operating profit was up 17% from the previous year to Rs 8,802 crore while net interest income soared 16%. On the provisioning front, ICICI Bank’s provisions increased 32% on-year to Rs 2,742 crore. However, this was 8% lower from the previous quarter. The bank has kept aside Rs 3,012 crore for accounts that have not been declared NPAs, owing to the Supreme Court order.

Analysts at CLSA have increased their earnings 9%-18% over this fiscal year to 2023 calendar year. “The retail slippage spike (2x vs FY20) was better than expected and corporate slippage of c.1% of loans was a big positive surprise and highlights its improvement in underwriting over the past 3-4 years,” they said. Pro forma gross NPA increased from 5.36% to 5.42%, largely from retail segment. Restructuring for advances worth Rs 2,500 crore has been invoked at ICICI Bank of which Rs 1,700 crore has been from the corporate side. 

Loan growth increased 10% on-year basis with retail business growth at 15.4%. SME loan growth came in at a massive 24.6%. “The significant loan growth was driven by mortgages (up 7% qoq), auto loans (up 7% qoq), business banking (up 12% qoq) and domestic corporate lending (up 8% qoq),” analysts at Yes Securities said. Domestic corporate loans grew 8.5% qoq – driven by lending to PSU entities and large corporate groups, they added.

Target price increased

CLSA has increased its target price for ICICI Bank from Rs 675 per share to Rs 800, valuing the bank at 2.5x March 23CL book and Rs155/share in subsidiary value. Yes Securities expect the bank to deliver an average 1.7% RoA and 14‐15% RoE over FY22‐23 with high capitalization

Levels. “The core bank trades at 1.6x FY23 P/ABV, attractive in a scenario of improving growth and strong profitability. Retain BUY and raise 12m PT to Rs675, as we also assign a better multiple now,” said Yes Securities.