Can ICICI Bank dethrone HDFC Bank as sector leader?

The two giants of the banking space – ICICI Bank and HDFC Bank – are battling it out to stay at the numero uno position.
 
Quarter after quarter, ICICI Bank has been threatening the leadership of HDFC Bank as the former reported steady earnings growth. Even during the March quarter, the earnings of ICICI Bank beat market estimates while those of HDFC Bank missed them.

It comes as no surprise then that analysts cut their target prices on HDFC Bank post result while upgraded or maintained their targets on ICICI Bank.

Going forward, analysts believe that steady growth delivery, strong asset quality and low credit costs, will help ICICI Bank deliver low-risk returns with consistent earnings per share compounding.
Let’s go to independent market analyst Ajay Bodke to have a better understanding of what’s ticking for ICICI Bank?
 
That said, there are a few metrics that investors need to watch out in both the banks to decide the winner.

From investment view point, analysts see 45% upside in HDFC Bank and 42% upside in ICICI Bank from a one-year perspective.

While Emkay Global opines that ICICI Bank can maintain its outperformance over HDFC Bank if it sustains its core performance and realises top management premium.

Nomura believes the tailwind of improving NIM, which had helped net interest income and pre-provision profit growth in FY22, is likely at its peak for ICICI Bank.
Those at JPMorgan also caution that ICICI Bank’s re-rating potential has largely played out with the lender’s valuation gap with HDFC Bank almost nil.

Overall, ICICI Bank appears well-placed to remain in the driver’s seat within the banking pack from near-term perspective as HDFC Bank faces de-rating amid slowdown in growth.

On Tuesday, investors will closely follow global cues for market direction. Besides, volatility is expected to rise ahead of the monthly F&O expiry.
Among individual shares, AU Small Finance Bank, Bajaj Finance and HDFC Life will be the key companies to announce their March quarter results. 

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