ICICI Bank share price hits 52-week high after Q1 results; this is why experts feel it is still a buy

ICICI Bank share price climbed over a per cent to hit its fresh 52-week high of ₹1,008 in morning trade on BSE on Monday (July 24) as most brokerage firms retained their positive views on the stock after its June quarter (Q1FY24) results.

On Saturday, ICICI Bank reported a 39.7 per cent year-on-year (YoY) rise in its standalone net profit for Q1FY24 at ₹9,648 crore compared to ₹6,905 crore in the corresponding period last year.

Its net interest income (NII) -or the difference between interest earned and interest paid, increased 38 per cent year-on-year to ₹18,227 crore in the first quarter of the current fiscal from ₹13,210 crore in the corresponding quarter last year. The net interest margin (NIM) came in at 4.78 per cent in the quarter compared to 4.01 per cent in the same quarter last year.

Read more: ICICI Bank Q1 Results: Net profit rises 40% to ₹9,648 crore, NII up 38% to ₹18,222 crore

Most brokerages remain positive

Most brokerage firms retained their positive views about the stock as they found the lender's Q1FY24 numbers better than expected. They also remain positive about the growth prospects of the company.

Brokerage firm Motilal Oswal Financial Services maintained a buy call on the stock with a target price of ₹1,150.

"ICICI Bank reported another steady quarter, driven by healthy NII and core PPoP (pre-provision operating profit) growth and controlled provisions underpinned by stable asset quality. The stable mix of the high-yielding portfolio (retail/business banking) and a low-cost liability franchise drove steady NII growth," Motilal Oswal pointed out.

The brokerage firm highlighted that ICICI Bank is seeing a strong recovery across segments, while asset quality trends remain healthy with PCR at nearly 83 per cent. The additional Covid-related provision buffer (1.2 per cent of loans) provides further comfort.

"We estimate ICICI Bank to deliver RoA (return on assets) and RoE (return on equity) of 2.2 per cent and 17.9 per cent, respectively, in FY25. After a strong outperformance backed by robust earnings growth (three-year CAGR of nearly 60 per cent), we estimate earnings growth to moderate to an 18 per cent CAGR over FY23-25, affected largely by a decline in margins and limited levers available on the opex/credit cost front," Motilal Oswal said.

The brokerage firm expects the stock returns to be more moderate for ICICI Bank and many other large-cap banking stocks.

Brokerage firm Nuvama Wealth Management also maintained its buy call on the stock with a target price of ₹1,180.

"The bank has outperformed peers again on the back of core PPoP and balanced growth. With consistent and better-than-peer performance for 14 quarters, ICICI Bank is our top pick," said Nuvama.

Among the global brokerage firms, Jefferies maintained an overweight view on the stock with a target price of ₹1,240, according to CNBC-TV18.

ICICI Bank's Q1 profit was ahead of estimate with a tad better NIMs. The global brokerage firm sees a 16 per cent CAGR in profit over FY23-26, CNBC-TV18 reported.

JPMorgan also maintained an overweight rating on the stock as it said PAT was 7 per cent ahead of estimates and core PPoP was in line with estimates driven by loan growth and higher NIMs, reported CNBC-TV18.

Morgan Stanley maintained an overweight view on the stock with a target price of ₹1,350 as it pointed out that the bank's deposit growth accelerated and its asset quality remains strong, reported CNBC-TV18.

Shares of ICICI Bank are up about 12 per cent this year so far against a nearly 10 per cent gain in the equity benchmark Sensex.

The stock traded 0.70 per cent higher at ₹1,003.70 around 10:30 am on BSE.

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Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.