Yes Securities gives buy tag to ICICI Bank shares. Sees 40% upside in long term
2 min read 27 Apr 2022, 01:31 PM ISTYes Securities report says that ICICI Bank share price may go up to ₹1043 levels in long term
PremiumICICI Bank share price has remained sideways to negative in last 6 months. In fact every rise in the stock in last 6 months tuned out as an opportunity for bears to make money out of it. In last 6 months, ICICI Bank shares have shed more than 11 per cent whereas in year-to-date (YTD) time, it went off around 4 per cent. However, following the private lender's healthy loan growth trends in retail, SME and business banking Yes Securities believes that the banking stocks may soon come out of the consolidation phase and give sharp upside moves.
Yes Securities report says that ICICI Bank share price may go up to ₹1043 levels in long term. ICICI Bank share price today on NSE is ₹736 per share. So, the yes Securities report believes that banking major may log around 40 per cent rise from current levels in long term.
Pointing at ICICI Bank's loan growth, Yes Securities report says, "Management stated that, in retail lending, market shares in individual micro markets are not saturated for the bank. Overall retail loan growth (including rural loans) was 5.8% QoQ. Specifically, for credit cards, while the revolve rate is still lower than pre-pandemic levels, there has been a gradual improvement. Credit card dues grew 9.9% QoQ whereas personal loans grew 10.4% QoQ."
On SME and business banking, the growth has not been driven by ticket size change but by enhancement of coverage. SME and business banking growth has been 11.3% QoQ and 10.2% QoQ, respectively. With regard to corporate lending, the bank lets go of opportunities where is it sees inadequate pricing. Corporate lending was relatively slower than the rest of the bank, growing 3.4% QoQ.
Suggesting ICICI Bank management to think of 'improving loan mix', Yes Securities says, "The impact from income tax refund amounted to 1 bp in 4QFY22, 6 bps in 3QFY22 and 1 bp in 4QFY21. The fourth quarter has traditionally seen an improvement of 8-10 bps due to the differential in number of days and other factors. Hence, the core net interest margin has remained stable sequentially after factoring in the impact from income tax refund. Management stated that cost of deposits has bottomed out. While the yield on existing book may move up, incremental yield will also have an impact. Importantly, we see loan mix evolving positively for ICICI."
The brokerage said that it values the standalone bank at 3.1x FY23 P/BV for an FY23E/24E RoE profile of 15.8/16.6%. We assign a value of ₹174 per share to the subsidiaries, on SOTP.
On its suggestion to positional investors in regard to ICICI Bank shares, Yes Securities report said, "We maintain ‘Buy’ rating on ICICI with a revised price target of ₹1043."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
