ICICI Bank shares surge on robust Q4 results; brokerages see 40% upside

Shares of ICICI Bank jumped in early trade on Monday as investors cheered the private sector lender’s March quarter earnings report, which beat Dalal Street’s estimates. The stock price also gained momentum after analysts retained their bullish view on ICICI Bank stocks, with an upside of 40% from the current market price.

ICICI Bank shares opened higher, in an otherwise bearish broader market, and gained as much as 1.9% to hit a high of ₹761.50 on the BSE in the opening deals. In contrast, the BSE Sensex was trading 577 points lower at 56,620 levels.

ICICI Bank, the country’s second-largest private sector lender by asset size, on Saturday, reported a robust financial performance for the fourth quarter ended March 31, 2022, driven by higher net interest income and a decline in provisions. The bank’s board also declared a dividend of ₹5 per share for the financial year ended March 31, 2022.

The bank’s net profit jumped 59.4% to ₹7,018.7 crore in Q4FY22, from ₹4,403 crore in the year-ago period. The net interest income (NII) rose 21% year-on-year (YoY) to ₹12,605 crore in the March quarter of 2022, while the net interest margin improved to 4% as against 3.84% in Q4 FY21.

During the quarter under review, the non-interest income, excluding treasury income, surged 11% YoY to ₹4,608 crore, while fee income jumped 14% YoY to ₹4,366 crore in Q4 FY22.

ICICI Bank’s provisions (excluding provision for tax) dropped 63% to ₹1,069 crore, from ₹2,883 crore in Q4FY21. This includes a contingency provision of ₹1,025 crore made on a prudent basis. On the asset quality front, the net non-performing assets dipped 24% YoY and 5% sequentially to ₹6,961 crore as of March 31, 2022. The net NPA ratio fell to 0.76% on March 31, 2022, from 1.14% in the year-ago period.

Analysts turn bullish post Q4 results

Global brokerage firm Credit Suisse has maintained an “outperform” rating on ICICI Bank stock with a revised target price of ₹870. The brokerage firm lauded the lender’s strong growth and profitability in Q4FY22 and expects the lender to deliver stellar earnings in the coming quarters.

Goldman Sachs has also affirmed “buy” rating with an upgraded target price of ₹938, citing that the bank is well-positioned to structurally report superior return on assets at closer to 1.9%.

Meanwhile, domestic brokerage YES Securities has recommended a “buy” rating with a revised target price of ₹1,043, from the current price of ₹743, an upside of 40%. The agency in its report says ICICI Bank’s management alludes to continued healthy loan growth trends in retail, SME, and business banking.