Analysts maintain 'Buy' calls on ICICI Bank after Q3; see up to 32% upside

ICICI Bank share price: According to analysts, ICICI Bank's performance in Q3FY25 underscores its premium valuations, as it continues to outperform peers, even amid systemic concerns

Defying the bearish sentiment in the markets on Monday, ICICI Bank’s share price rose by 2 per cent, reaching an intraday high of Rs 1,234.4 per share on the BSE. With a 1.5 per cent gain at the close, the stock emerged as the top performer on both the BSE Sensex and the National Stock Exchange Nifty 50 indices. In comparison, the benchmark indices ended up to 1.14 per cent lower.

 

This outperformance followed analysts maintaining their bullish stance on ICICI Bank, citing its “resilient” performance during the October-December quarter (Q3) of the current financial year (2024-25/FY25).

 

On Saturday, ICICI Bank announced that its standalone net profit for Q3FY25 had jumped by 14.8 per cent year-on-year (Y-o-Y) to Rs 11,792 crore. Net interest income (NII) rose to Rs 20,371 crore, a 9.1 per cent Y-o-Y increase, while the net interest margin remained mostly flat, cooling by 2 basis points (bps) to 4.25 per cent in Q3, compared to 4.27 per cent in the previous quarter (Q2).

 

 

The growth in NII was driven by a 15.1 per cent Y-o-Y and 3.2 per cent sequential growth in net advances, which totalled Rs 12.82 trillion. Total deposits grew at a better-than-industry average rate of 14.1 per cent Y-o-Y and 1.5 per cent sequentially, reaching Rs 15.2 trillion.

 

ICICI Bank’s gross non-performing asset (NPA) ratio stood at 1.96 per cent as of December 31, 2024, compared to 1.97 per cent as of September 30, 2024. The net NPA ratio was 0.42 per cent at the end of the December quarter. 

Also Read: Bank of India shares rally 6% after robust profit growth in Q3; details

 

  Here’s what brokerages are saying about ICICI Bank shares:

 

Emkay Global Financial Services | ‘Buy’ | Target price: Rs 1,450

 

Defying industry and peer trends, ICICI Bank reported healthy credit growth, driven by a pickup in the corporate book, with business banking growing by 32 per cent Y-o-Y. Meanwhile, retail portfolio growth moderated to 11 per cent Y-o-Y due to a deliberate slowdown in personal loans, loans against securities, and vehicle loans.

 

Deposit growth continues to outpace industry trends, though slower at 1.5 per cent quarter-on-quarter (Q-o-Q), as the bank avoids high-cost deposits, thereby protecting margins. Despite interest reversal on Kisan Credit Card NPAs leading to some compression in loan yields, the bank maintained a stable margin, thanks to a better loan-deposit ratio and higher interest on income-tax refunds (1 bps benefit Q-o-Q).

 

Nuvama Institutional Equities | ‘Buy’ | Target price: Rs 1,470

 

ICICI Bank’s slippage rose to 1.9 per cent from 1.7 per cent in Q2FY25. However, excluding agriculture, core slippage grew only 6 per cent Q-o-Q and 5 per cent Y-o-Y. The core slippage ratio of 1.7 per cent remained flat Q-o-Q and decreased by 20 bps Y-o-Y. The bank saw upgrades and repayments in ‘BB and below’ loans, as well as repayment of non-fund exposures, resulting in a release of credit costs.

 

Management reiterated that the bank is not seeing stress buildup in its key lending segments. While gross credit costs are expected to rise, they are unlikely to increase appreciably.

 

JM Financial Services | ‘Buy’ | Target price: Rs 1,420

 

The management acknowledged that asset quality challenges in the unsecured segment are affecting the bank. However, proactive measures such as tightening underwriting filters, focusing on existing-to-bank customers (60 per cent of the portfolio), and moderating growth in higher-risk segments (personal loans: -1.3 per cent Q-o-Q, credit cards: +2.8 per cent Q-o-Q) have been key in preserving asset quality.

 

Motilal Oswal Financial Services | ‘Buy’ | Target price: Rs 1,550

 

ICICI Bank delivered another steady quarter in a highly uncertain environment, with credit costs standing at just 37 bps, and the Q3 slippage rate lower than that of the first quarter. The bank posted an 11 per cent growth in advances during the first nine months of FY25 and is on track to outperform both peers and the industry.

 

Global brokerages

 

Reports indicate that global brokerage CLSA has maintained its ‘outperform’ rating on the bank, with a target of Rs 1,600 per share. Jefferies also maintains a ‘buy’ rating (target: Rs 1,600), and JP Morgan maintains an ‘overweight’ rating (target: Rs 1,500).