ICICI Bank shares rise 3% after Q1 results. Why Bernstein and 4 other brokerages see up to 32% upside

Shares of ICICI Bank gained 3% to Rs 1,480 on the BSE on Monday after the private sector lender reported strong June-quarter earnings, with double-digit growth in profit and net interest income, supported by healthy loan growth and improved asset quality.

The bank posted a 15.9% year-on-year (YoY) rise in standalone net profit to Rs 14,805 crore for the June quarter, compared with Rs 12,768 crore in the corresponding period last year. Net interest income (NII) increased 12.7% YoY to Rs 24,384 crore from Rs 21,635 crore.

Also Read: HDFC Bank Share Prices fall 5% after Q1 results


Should you buy, sell or hold ICICI Bank shares?
Bernstein has upgraded ICICI Bank to 'Outperform' from 'Market-Perform' and set a target price of Rs 1,800, implying a 27% upside. The brokerage believes the bank has returned to a higher growth trajectory than its peers, supported by benign asset quality and resilient net interest margins (NIMs), which it expects to provide a strong cushion for peak profitability.

Bernstein also said the overall outlook for the banking sector has improved materially from earlier expectations, while competitive intensity from public sector banks is beginning to ease. It added that the key risks to its outlook are macroeconomic rather than bank-specific.

Motilal Oswal has reiterated its 'Buy' rating on ICICI Bank with a target price of Rs 1,750, implying a 21% upside, after the lender reported another strong quarter marked by resilient net interest margins (NIMs), healthy core profitability and robust asset quality. The brokerage expects margins to remain broadly stable through FY27.

Provisions came in lower than expected due to a one-off recovery and sustained lower slippages, while the bank retained its conservative credit cost guidance of 50 basis points.

Motilal Oswal expects credit costs to remain in the 0.4-0.5% range and believes ICICI Bank is well placed to deliver an average RoA of 2.33% over FY27-28E. It also highlighted the bank's industry-leading asset quality and contingency buffer of Rs 131 billion, equivalent to 0.8% of loans, and raised its earnings estimates by 4-5%, factoring in an FY28E RoA/RoE of 2.3%/16.8%.

Also read: Q1 earnings begin on a strong note as banks fuel double-digit growth

JM Financial has maintained its 'Buy' rating on ICICI Bank while raising its target price to Rs 1,710 from Rs 1,630, implying an upside of around 18.4%. The brokerage believes ICICI Bank deserves to trade at a premium valuation among large private sector banks, supported by its sector-leading loan growth, superior net interest margin (NIM) management and strong asset quality trends. Reflecting the strong operating performance, JM Financial has raised its FY27 and FY28 EPS estimates by 2-5% and expects the bank to deliver an average RoA of around 2.3% and an RoE of about 17% over FY27-28E.

Centrum has retained its 'Buy' rating on ICICI Bank with a target price of Rs 1,900, implying an upside of around 32%. The brokerage said the bank delivered another strong quarter, reinforcing its position as one of the highest-quality franchises in the banking sector. It highlighted 19.6% YoY growth in advances, the fastest pace in 14 quarters, driven by healthy momentum in business banking, rural loans and domestic corporate lending.

Centrum noted that retail loan growth remains calibrated as the management continues to prioritise risk-adjusted returns over market share gains. It also expects margin performance to remain resilient, supported by lower funding costs and a favourable loan mix, which should drive modest expansion in net interest margins over the medium term.

Dolat Capital has retained its 'Buy' rating on ICICI Bank while raising its target price to Rs 1,800, implying an upside of around 25%. The brokerage said the bank's Q1FY27 performance exceeded expectations across key metrics, including loan growth, deposit growth, credit costs and, to a lesser extent, net interest margins.

Also read: F&O Talk: Nifty IT gaining strong momentum, says Sudeep Shah; outlines HDFC Bank, ICICI Bank strategy after Q1 results

It also noted that FCNR deposits are expected to provide liquidity to support future growth, while credit costs remained low despite seasonal pressure from the agriculture segment.

ICICI Bank Q1 highlights
Core operating profit rose 15.6% YoY to Rs 20,235 crore from Rs 17,505 crore. Excluding dividends received from subsidiaries, core operating profit grew 18.3% YoY to Rs 19,125 crore.

Non-interest income, excluding treasury operations, increased 16% YoY to Rs 8,425 crore. Fee income jumped 23.5% YoY to Rs 7,286 crore, with retail, rural and business banking customers contributing nearly 72% of the total fee income.

The bank's advances grew 19.6% YoY and 5% sequentially to Rs 16.31 lakh crore as of the end of June. Business banking loans rose 28.2%, while the rural portfolio expanded 35.4%. Domestic corporate loans increased 18.5%, and retail loans grew 12%.

Asset quality improved from the year-ago period. The gross non-performing asset (NPA) ratio declined to 1.38% from 1.67% a year earlier and 1.40% in the March quarter. The net NPA ratio improved to 0.35% from 0.41% in the corresponding quarter last year, although it edged up from 0.33% in the previous quarter.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)