ICICI Bank: Brokerages remain bullish on stock post Q4 earnings; raise target price

ICICI Bank reports robust Q4 FY24 results with 17% YoY increase in net earnings. RoA at 2.4% and RoE at 18.5%. NIM grew by 8% YoY. Brokerages expect continued growth and strong asset quality, setting target prices between 1,275 to 1,350 per share.

A Ksheerasagar
First Published29 Apr 2024, 10:25 AM IST
JP Morgan maintains an 'overweight' stance on ICICI Bank, with a target price of  <span class='webrupee'>₹</span>1,300, while Nomura, the Japanese brokerage firm, also maintains its 'buy' rating with a target price of  <span class='webrupee'>₹</span>1,335 per share.
JP Morgan maintains an ’overweight’ stance on ICICI Bank, with a target price of ₹1,300, while Nomura, the Japanese brokerage firm, also maintains its ’buy’ rating with a target price of ₹1,335 per share.(Bloomberg News)

Analysts maintain their optimistic view on ICICI Bank, the second largest private sector bank in the country. They have raised their target prices for the stock after the release of the bank's Q4 and full fiscal year FY24 financial results, which came in above their estimates. 

On Friday after market hours, the bank reported strong performance in the fourth quarter of fiscal year 2024 (4QFY24), with a 17% year-on-year (YoY) increase in net earnings. This growth was driven by healthy growth in net interest income (NII), controlled operating expenses, and managed credit costs. 

The bank achieved an annualized Return on Assets (RoA) of 2.4% and a Return on Equity (RoE) of 18.5%. For the full fiscal year FY24, Profit After Tax (PAT) reached 408.9 billion, marking a 28.2% YoY increase.

The bank's Net Interest Margin (NIM) grew by 8% YoY, supported by a robust 16.2% YoY (2.7% quarter-on-quarter, QoQ) increase in loans. However, NIMs moderated slightly by 3 basis points (bp) QoQ to 4.40%. 

Also Read: Yes Bank share price jumps 8% after strong Q4 results 2024. Do you own?

Other income increased by 11% YoY but decreased by 7% QoQ to 56.5 billion, primarily due to strong growth in core fees (13% YoY) offset by modest treasury gains at 2.8 billion.

In terms of business expansion, advances grew by 16.2% YoY (2.7% QoQ), driven by growth in retail, business banking (BB), and small and medium-sized enterprise (SME) loans. Within the retail segment, there was healthy growth in housing, rural, and unsecured credit (personal loans and credit cards), according to Motilal Oswal. 

The proportion of unsecured loans increased to approximately 14.2% of total loans. SME lending expanded by 25% YoY, while BB loans grew by 29% YoY.

We have compiled brokerage ratings and reviews on ICICI Bank's Q4 numbers, as outlined below.

Also Read: Ashsih Kacholia picks up stake in this multibagger stock Walchandnagar Industries during Q4FY24

JM Financial 

The brokerage is confident that ICICI Bank is well-positioned to achieve an average Return on Assets (RoA) of +2.3% and Return on Equity (RoE) of 18.5% over the estimated period of FY25–26. 

This positive outlook is supported by the bank's strong asset quality, sustained growth trajectory, although margins are expected to slightly ease. ICICI Bank consistently outperforms its larger private sector counterparts in terms of returns, which the brokerage anticipates will help maintain its premium valuation.

Following the bank's numbers, JM Financial maintains its target price of 1,330 and maintains a ‘Buy’ rating on the stock. This target price indicates an upside potential of 20% from the stock's previous closing price of 1,107. 

Also Read: BSE share price declines 17% post SEBI directions

Systematix Institutional Equities 

Systematix expects the bank's margin impact to be moderate compared to its earlier estimates due to the bank’s ability to pass on rates reflected in largely stable spreads and the management’s focus on maintaining pricing discipline. 

The brokerage has reduced its estimates for fee income due to slower business growth in certain retail segments, such as personal loans (PL). However, this reduction is offset by lower operating expenses. Additionally, the brokerage has revised down its estimates for credit costs, reflecting the bank's sustained asset quality.

Overall, Systematix has adjusted its Profit After Tax (PAT) estimates for fiscal years 2025 and 2026 by 5%, resulting in a 10-basis point (bps) improvement in Return on Assets (RoA). It maintains its 'buy' rating on the stock and has raised the target price to 1,275 per share, indicating an upside rally of 15.17%.

"In our view, a tad higher multiple is also justified considering that large peer private banks face idiosyncratic issues like HDFCB with its merger-related uncertainties, Kotak with its ongoing regulatory scrutiny, and Axis with growth headwinds. ICICI Bank remains our preferred pick," said Systematix.

Antique Stock Broking

Antique Stock Broking stated that ICICI Bank maintains its track record of robust performance, boasting a superior Return on Assets (RoA), strong asset quality, and a solid balance sheet. In contrast to previous expectations, the Net Interest Margin (NIM) is anticipated to remain elevated, resulting in a 4% upgrade for FY25 and a -2% adjustment for FY26 due to the potential for softer NIMs resulting from a delayed rate cut cycle.

Also Read: Shareholders of ICICI Securities lodge lawsuit with NCLT over delisting proposal

The brokerage highlights that the bank has established robust buffers, which would safeguard or smooth earnings even in the event of an adverse macroeconomic environment. It anticipates a RoA of 2.2% for FY25 and 2% for FY26, along with a Return on Equity (RoE) of 17% for FY25 and 16% for FY26.

The brokerage also maintained a 'buy' rating with a revised price target higher to 1,300 apiece.

Motilal Oswal 

The bank continued its steady performance in the latest quarter, propelled by robust Net Interest Income (NII) and disciplined management of operating expenses and provisions, supported by healthy asset quality. The balanced composition of its portfolio, with a focus on high-yielding segments such as retail and business banking, alongside sustained growth in business banking (BB), small and medium-sized enterprises (SME), and secured retail loans, has fostered widespread expansion, ensuring a resilient diversification of its business.

Also Read: Q4 Results: ICICI Bank declares dividend of 10 per equity share

While the rate of Net Interest Margin (NIM) decline slowed down (3 basis points QoQ), ongoing pressure on funding costs may persistently keep margins at lower levels. Nevertheless, enhancements in asset quality have led to further reductions in gross non-performing asset (GNPA) and net non-performing asset (NNPA) ratios.

The additional provisioning buffer (equivalent to 1.1% of loans) offers additional reassurance. Motilal has raised its earnings per share (EPS) estimates by 2% for FY26, with minor adjustments to its FY25 projections, anticipating Return on Assets (RoA) and Return on Equity (RoE) of 2.26% and 18.0%, respectively, in FY26.

Also Read: Q4 Results: ICICI Prudential reports narrower new business margin for FY 2024

The brokerage anticipates the bank will maintain a CAGR of around 14% in profit after tax (PAT) from FY24 to FY26E. It has reaffirmed its 'Buy' recommendation on the stock, setting a revised price target of 1,300.

Similarly, CLSA has upheld its 'buy' rating and raised the target price to 1,350 per share. JP Morgan maintains an 'overweight' stance on ICICI Bank, with a target price of 1,300, while Nomura, the Japanese brokerage firm, also maintains its 'buy' rating with a target price of 1,335 per share.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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₹313 Cr

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First Published:29 Apr 2024, 10:25 AM IST
HomeMarketsStock MarketsICICI Bank: Brokerages remain bullish on stock post Q4 earnings; raise target price

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