In its Analyst Day meet, ICICI Bank’s CEO reiterated the bank’s focus on return on capital via granular profit, building of the most trusted brand and digital lead over peers. While no explicit financial guidance was given, the bank stated that focus would remain on risk calibrated operating profit and in turn return on capital, while asset quality would remain a cornerstone.
India’s resilient macro structural changes in corporate and consumer behaviour provide the best-in-37-years opportunity for Indian banks, analysts who attended the meet said ICICI Bank CEO as saying .
“Our perception of commentary was that ICICI Bank would continue to profitably grow by focusing on superior customer experience,” said Prabhudas Lilladher , which has a target of Rs 1,090 on the stock. ICICI Bank closed at Rs 933.55 on Monday, up 0.30 per cent.
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The meet underscores our confidence the bank is progressing well, taking the right steps, and moving beyond hygiene to chase excellence, said Elara Securities. “We believe the bank’s focused approach and consistent earnings delivery will underpin its sustainable rerating, helping it to establish higher-than-previous cycle valuation multiple,” said Elara Securities, which has a target of Rs 1,100 on the stock.
Jefferies said ICICI Bank’s analyst day focussed on strategic initiatives & priorities. Focus, it said, was on smoother customer journey, digitisation and network expansion. SME, supply chain financing and retail was focus segments, Jefferies said adding that the management at macro level reaffirmed stronger growth with better retail borrower behaviour and corporate balance sheet.
“Despite no takeaways for near-term earning per se, visibility of growth runway is positive. ICICI stays among our top-picks,” Jefferies said.
Morgan Stanley said ICICI Bank should graduate to a “compounding machine,” and foresees continued re-rating over the next few years. Given the size of the long-term growth opportunity, it said, investors have been willing to pay high multiples for financials that have displayed strong earnings compounding and avoided bad loan cycles, Morgan Stanley said.
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“ICICI is well placed for that, we believe,” Morgan Stanley said.
Macro tailwinds and strong execution make ICICI a winner, said Nuvama Institutional Equities.
“With rising impetus on its bank-tech initiatives, we believe ICICI Bank is set to sustain its best-in-class profitability with digitally-led, market share gains in all segments. ‘One-bank, one-RoE’ was the biggest takeaway from the meet – which once sounded too idealistic, is now being imbibed even by the RMs and branch staff, leading to significant change in DNA/culture from a lumpy, business-growth-oriented approach to a sustainable, granular profitability approach,” Nuvama said adding that ICICI’s clear bank-tech leadership amidst India’s digital revolution, lends ICICI an edge over its peers.
Calling ICICI Bank its top pick, the brokerage has a target of Rs 1,115 on the stock.
Kotak Institutional Equities said it has an unchanged target of Rs 1,070 on the stock as it values the lender at 2.8 times book and 19 times September 2024E EPS. it values the subsidiaries at Rs 175 per share.
“The bank is at a stage where a strong outperformance is unlikely, but we are comfortable to be positive given the strength of its go-to-market strategy. The sector is witnessing comfortable growth and benign credit costs. This implies that the outperformance is likely to be stronger with the weaker franchises,” it said.
