ICICI Bank has historically outperformed broader indices. However, the stock has fallen more than 5 percent so far in 2022. The stock has underperformed benchmark Nifty Bank, which is up 2 percent this year.

ICICI Bank’s share price has fallen more than 5 percent so far in 2022. The stock has underperformed benchmark Nifty Bank, which is up 2 percent this year. Despite the correction in ICICI Bank script, Ventura Securities is bullish on the private lender. The domestic brokerage firm has restarted coverage with a ‘Buy’ rating on the stock with a target price of Rs 1,024, implying a potential rally of 47 percent. It sees upside potential of 47% over an 18-month period, given that “ICICI Bank is leading the way (among the major private sector banks) to take advantage of the rebound in the Indian economy.”

Asset quality to stay stable, NII to grow

Ventura expects the asset quality of ICICI Bank to remain stable, with GNPA and NNPA expected to decline to 4 percent and 0.8 percent in FY24. NII is expected to grow at a 16.6 percent CAGR to Rs 61,883.2 cr with the NIMs improving 23 basis points to 3.8%. in the same.

Healthy loan portfolio growth, superior return ratios:

Ventura expects ICICI Bank to increase its loan portfolio by 14.6% CAGR of Rs 11,03,866 crore over FY21-24 driven by 10.5% CAGR in corporate lending, 13.6% CAGR in retail, 21% in SME loans, 7.3% in foreign loans and 3% in BRDS/IBPC loans. It also expects yield ratios, namely RoAA and RoAE, to rise 25 bps and 118 bps from 1.4% and 12.3% in FY21 to 1.6% and 13.4% in FY24.

Faster adoption of digital strategy could lead to higher net profit

In recent times, ICICI Bank has raised the bar in its digital offering to compete with fintech companies. “Accelerating on that front could lead to a reduction in costs to income and higher net profits in the future,” Ventura said in its note. ICICI Bank has introduced iMobile Pay, the bank’s own universal fintech app. The app is scalable and already has approximately 5.3 million activations from non ICICI Bank customers and a 73% increase in transaction value.

AUM, PAT Growth estimated around 12-15%

Going forward, ICICI’s total AUM and NII is estimated to grow at a CAGR of 14.6% and 16.6% to Rs 11,03,866 crore and Rs 61,883 crore respectively over FY21-24. Operating profit before provisions is expected to grow at a CAGR of 11.9% to Rs 51,040 crore. NIMs are expected to remain more or less stable in FY21-24, while PAT is expected to grow at 20.4% CAGR to Rs 28,270.2 cr in FY24, from Rs 16,192.7 crore in FY21.

ICICI Bank Stock Rating: BUY
Target price Rs 1,024

“ICICI Bank has historically outperformed broader indices by a huge margin given its track record of success. We are resuming coverage on ICICI Bank with a target price of Rs 1,024 (2.2x FY24 standalone P/B), representing a 47% increase from the 18-month CMP of Rs 697,” Ventura said.

Bulls and Bears Scenarios

Bull Case: Assuming FY24 AUM of Rs 12,000,000 cr in FY24 (CAGR of 17.8% over FY21-24) and NIM margins of ~4.4% (+80bps over FY21), it will result being a Bull Case price target of Rs 1,392 per share (upside of 100%).

Bear Case: Assuming FY24 AUM of Rs 10,000,000 cr in FY24 (CAGR of 10.9%) and NIM margins of ~3.5% (-10bps over FY21), the result will be a Bear Case price target of Rs 649 per share (7%).

(The stock recommendations in this story are from the respective research analysts and brokerage firms. Financial Express Online bears no responsibility whatsoever for their investment advice. Capital market investments are subject to rules and regulations. Consult your investment advisor before investing.)


This post Share price of ICICI Bank falls 5% in 2022; This brokerage remains bullish, says buy, stocks could rise 47% was original published at “https://www.financialexpress.com/market/icici-bank-share-price-tanks-5-in-2022-ventura-securities-says-buy-stock-may-rally-47/2463812/”

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