ICICI Bank Among Top Picks
The stock is ICICI Bank, NSE -1.53 %, is the country’s second-largest private lender. The Covid-19 impact has not been severe for the bank, and a significant presence in retail and the corporate side predicts in favor.
The key highlights of September quarters are increased mobile transactions, soft net interest margins, improvement in asset quality, and recovery in disbursements to pre-Covid levels.
On October 31, the bank reported -
- Six-fold jump in standalone net profit for the quarter at a record high of Rs 4,251 crore.
- Domestic loans grew 10% while retail loans grew 13 percent, and corporate loans book 7% over last year.
- The lender disbursed the highest ever mortgage loans for the quarter and posted strong deposit growth of 20% over last year.
Although the stock is still down by 11%, currently trading at INR 480 for the year-to-date period. It has logged a 50% gain for the last three years while 100% in the last five years.
Elara Capital said, "ICICI Bank remains its top pick backed by improving retail loan growth, sufficient contingency provisions, granular business strategy, and strong CET 1 of 16.45%. The percentge retained its 'buy' rating and raised its price target to Rs 530."
"The acceleration of loan growth in the next two to three quarters should drive a strong re-rating. ICICI Bank has guided for normalization of credit costs in the next financial year starting April 2021," said Morgan Stanley
Abhimanyu Sofat, head of research at IIFL Securities, said ICICI Bank is the best bet in the banking pack at this point of time.
Sofat states, "The valuation is at 1.4 times price to book. Why would people not recommend it when it is this attractive?"
He also adds, “It has not performed very well over the last decade. After the leadership change, there have been very positive changes. Also, most subsidiaries are doing well. The stock seems poised to deliver gains from here.”
Analysts are rhyming on the tune of its prospects, saying, "ICICI has only buy calls." This banking stock has no 'sell' or 'hold' calls. The stock has been listed among Diwali's top picks by Prabhudas Lilladher, Religare Broking, HDFC Securities, and YES Securities. Also, it in its high conviction list of Emkay Global.
After the September quarter earnings, a host of brokerages including CLSA, Edelweiss NSE 4.95 %, Jefferies, Nomura, Motilal Oswal, Elara, Antique Stock Broking, and JM Financial have retained 'buy' ratings on the stock.
Sandeep Bakhshi took charge as the Managing Director and CEO of the bank after Kochhar’s exit.
The bank underwent a significant leadership change as Sandeep Bakhshi took charge as the Managing Director and CEO of the bank after Kochhar’s exit.
“There is a significant leadership change driving lot of changes in the bank in a short period of time I think with the culture, dynamics, energy levels of the bank has changed,” said Vikas Khemani, Founder, Carnelian Capital.