ICICI Bank shares gain 1% on strong Q2 earnings. Should you buy?
ICICI Bank gained over 1% on Monday to hit the day's high of Rs 944.80 on the NSE following strong September quarter earnings. The stock was the top Nifty gainer despite a lacklustre opening trade.
The stock also gained on favourable views taken by a couple of top brokerages including Jefferies, Kotak Institutional Equities, Motilal Oswal and Nuvama, all of which recommended a buy on the counter.
India's second-largest private lender, ICICI Bank, on Saturday reported a 36% year-on-year (YoY) growth in net profit for the quarter ended September to Rs 10,261 crore. Net interest income increased 24% on year to Rs 18,308 crore. Total income for the quarter increased 31% on year to Rs 40,697 crore.
Provisions in the quarter dropped sharply to Rs 583 crore, from Rs 1,645 crore a year ago, and Rs 1,292.4 crore a quarter ago.
The gross non-performing assets ratio as of September end was 2.48%, lower than 3.19% a year ago, and 2.76% a quarter ago. Net non-performing assets ratio was 0.43%, lower than 0.61% a year ago, and 0.48% a quarter ago.
Here is what brokerages recommended:
Jefferies: Buy | Target: Rs 1,250
Jefferies has maintained a buy view on ICICI Bank and increased the price target to Rs 1,250 from Rs 1,240, earlier. The NII was a tad ahead of its estimates despite NIM compression, the US-based brokerage said.
Corporate NPL [non-performing loan] upgrades kept credit costs low, it said, adding that the management is comfortable about the quality of retail books. Going ahead, Jefferies sees lower NIMS and higher credit costs, but the bank could still deliver 18% ROE in FY25. The stock remains Jefferies' top pick.
Kotak Equities: Buy | Target: Rs 1,150
ICICI Bank remains one of the top picks of Kotak Equities
