ICICI Bank Forecasted to Reach Rs 1716, Analysts Recommend Purchase

ICICI Bank Sees Accelerated Loan Growth Amid Stable Net Interest Margin

In a recent research report, Anand Rathi's team has noted a significant acceleration in ICICI Bank's loan growth, reaching 15.8% year-over-year (y/y) after a subdued expansion of 10.3%-13.9% y/y over the last five quarters. This growth was primarily driven by the bank's business banking and rural loans, as well as a recovery in the mortgage segment.

Notably, the bank's net interest margin (NIM) remained stable on a sequential basis, as improvements in the cost of funds outpaced declines in yields. The asset quality of ICICI Bank also saw an improvement on both a quarterly and yearly basis, with net slippages of 0.32%. Furthermore, the return on equity (RoE) sustained above 15%, underscoring the bank's robust financial performance.

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In comparison to its peer, HDFC Bank, ICICI Bank's growth and margin outlook is expected to remain stronger, driven by its better liquidity position. The bank's higher liquidity coverage ratio (LCR) and cash and investments will provide a competitive edge, solidifying ICICI Bank's position as a preferred pick.

Maintaining BUY Rating and Target Price

In light of these factors, Anand Rathi's team continues to maintain a BUY rating on ICICI Bank, with a target price of Rs1,716. This valuation is based on the bank's core business, valued at 2.5x FY28e price-to-assets-based valuation (P/ABV), and assigns Rs242/share to its subsidiaries.