Motilal Oswal Maintains Buy Recommendation for ICICI Bank with Target Price of Rs 1750
Motilal Oswal Research Report: ICICI Bank Sees Strong Performance
ICICI Bank (ICICIBC) has reported a profit after tax (PAT) of INR137 billion for the fourth quarter of fiscal year 2026, marking a 4% beat on the Motilal Oswal Financial Services Limited (MOFSLe) estimate. This strong core performance was driven by negligible provisions, enabling the bank to achieve a profit. The net interest margins (NIMs) improved by 2 basis points quarter-over-quarter to 4.32%, with a 5 basis point positive impact from interest on IT refund compared to 1 basis point in the previous quarter.
Key performance indicators for ICICI Bank in the fourth quarter of fiscal year 2026 included an adjusted net interest margin (Adj NIMs) that aligned with estimates and a return on assets (RoA) of 2.4%. The bank's return on assets (RoA) for the entire fiscal year 2026 stood at 2.32%, making it the best-in-class performance in the sector. Motilal Oswal's research team believes that ICICI Bank is well-positioned to sustain an average return on assets (RoA) of 2.25% over the fiscal years 2027 and 2028, driven by steady business growth, resilient margins, and controlled credit costs.
Despite the bank's strong operating performance, its stock has been relatively flat in the past year, reflecting the broader derating across banking stocks due to persistent foreign institutional investor (FII) selling in recent months. However, with growth gaining traction and operating performance holding strong, Motilal Oswal expects the bank to gradually rerate.
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Recommendation and Outlook
ICICI Bank remains Motilal Oswal's top "BUY" recommendation in the sector, with a target price of INR1,750 (2.5 times September 2027 estimated absolute book value).
| Quarter | PAT (INR billion) | NIMs (%) | Adj NIMs (%) | RoA (%) |
|---|---|---|---|---|
| 4QFY26 | 137 | 4.32 | (aligned with est.) | 2.4 |
| FY26 | 2.32 |
Earnings Estimates Motilal Oswal has fine-tuned its earnings estimates for ICICI Bank, expecting a return on assets (RoA) of 2.3% and a return on equity (RoE) of 16.2% for the fiscal year 2028.
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Investor Takeaway
Investors should consider ICICI Bank as a top buy in the sector with a target price of Rs 1750.
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