ICICI Bank hits record high of Rs 388; up 11% thus far in March

Shares of ICICI Bank hit a record high of Rs 388, up 3 per cent, on the National Stock Exchange (NSE) in intra-day trade on Tuesday.

The stock surpassed its previous high of Rs 383 touched on January 9, 2019 in intra-day trade. The counter has seen huge volumes with a combined 12.31 million equity shares changing hands in first hour of trading on the NSE and BSE.

In the first seven trading days of March, ICICI Bank has outperformed the market by gaining 11 per cent. In comparison, the benchmark Nifty 50 index has moved 4 per cent north during the same period.

Analysts remain bullish on the ICICI Bank stock with a target price in the range of Rs 425 to Rs 470 as the brokerage firms believe the bank is entering a new phase charaterised by better asset quality, healthy credit growth and superior margins.

“Management indicated that the bank’s exposures to promoter financing/sensitive non-banking finance companies (NBFC) exposures/other stressed sectors beyond the disclosed BB & Below pool, is within comfort levels. Management expects incremental loan growth to be driven by retail and SME segments (20 per cent plus and 15 per cent plus YoY respectively), which should further be supported by a corporate credit growth recovery," analysts at JM Financial said in company update.

The private sector lender's management is confident of achieving RoE of 15 per cent by June 2020, driven by moderation in credit costs and an increased impetus on the pricing of loan products. With regard to the ongoing CBI probe, the management believes that the bank's business is fully insulated and the bank's management is in full cooperation with investigative authorities, the brokerage firm said in management meets update with 12 month price target of Rs 430 per share.

Analysts at Reliance Securities believe ICICI Bank's liability and asset franchise has strengthened over the years with derisking of its loan portfolio, rising market share in CASA, increased competitiveness in the cost of funds relative to peers, and improving capital efficiencies. Further, lower residual stress and high PCR should result in stabilisation of credit cost.

Nonetheless, the valuations continue to lag behind peers, with the stock currently trading close to its long term average valuation, despite the increased share of retail loans. Expecting the aberration to fade, we see a strong upside in the stock, the brokerage firm said in company update. It maintains ‘buy’ rating on the stock with a target price of Rs 470 per share.