ICICI Bank shares rose 3%

In early morning trading today, October 28, shares of ICICI Bank, the nation’s second-largest private sector bank, surged 3.1% to ₹1294.55 a share after the firm’s September quarter results exceeded street predictions and led analysts to increase their target prices for the stock.

ICICI Bank’s Q2FY25 results, according to domestic brokerage company Nuvama Institutional Equities, stand out from sector-wide headwinds including slower deposit growth and declining asset quality. Since FY21, ICICI has been able to consistently produce solid profits every quarter by building a robust balance sheet with a strong emphasis on granular, high-quality assets.

“In addition to outperforming its rivals in terms of profits in Q2FY25, ICICI has produced impressive performance (4% QoQ increase in core PPOP) in a poor environment, something that most banks are unable to do even in a good economic climate. The firm said, “We anticipate that the stock’s premium to peers will increase, particularly to high-growth peers.”

Because of this, the brokerage maintained its ‘buy’ recommendation on the company and increased its target price from ₹1,450 to ₹1,470 per share.

Prabhudas Lilladher also reaffirmed its “buy” recommendation and raised its target price from ₹1,520 to ₹1,640, pointing to ICICI’s impressive performance in the face of stress in the larger unsecured lending market.

With 43 basis points in Q2FY25, ICICI’s provisions are best-in-class when compared to other private peers’ 50–78 basis points. This suggests that during FY24–27E, provisions may stay lower at 40–50 basis points (compared to peers’ 50–65 basis points).

By combining the softer NIM environment with efficient cost reductions, ICICI continues to safeguard key PPoP. According to the brokerage, its core return on assets (RoA) of 2.1% is still the highest in its class.

Q2 results: Another excellent quarter

While rivals saw growth slowdowns and rising credit costs, the bank released another impressive set of figures for the September quarter on Saturday, including reduced QoQ slippage. Due to improved fees and opex, its operational profit and PAT increased.