ICICI Bank Shares Target Price Raised After Steady Q4 - Should you Buy

ICICI Bank share price surged over 2% to ₹1,131 per share on April 29 after the lender reported a steady show in the January-March quarter (fourth quarter FY24). Brokerages believe that the bank is poised for re-rating ahead, given its strong deposit growth, healthy asset quality, and attractive valuations.

JP Morgan analysts shared an 'Overweight' rating on ICICI Bank with a target price of ₹1,300 per share, saying that the lender's growth is meaningfully ahead of large-cap peers. "We see scope for upward re-rating given better growth. Since valuations are reasonable at 13x FY26, we upgrade FY25/26 EPS by 4% each," they said.

Japanese investment firm Nomura too expects ICICI Bank to deliver a 13% profit-after-tax (PAT) compounded annual growth rate (CAGR) over FY24-26 after reporting another strong quarter. The brokerage firm shared a 'buy' call with a target price of ₹1,335 per share.

The private sector lender reported a healthy performance in Q4, with 17% year-on-year (YoY) growth in profit amid contained operating expenses and provisions. The pace of NIM contraction decelerated, down 3 bps quarter-on-quarter (QoQ) at 4.4%.

However, its net interest margin (NIM) slipped to 4.4% in the fourth quarter of FY24 as against 4.9% in the year-ago period. Sequentially, the NIM was at 4.43% in the third quarter of FY24. Despite margin drag seen in the March quarter, analysts at Bernstein believe that the pressure was limited due to ultra-low credit costs. The brokerage firm shared a 'market perform' rating on ICICI Bank, with a target price of ₹1,150 per share.

Sandeep Batra, Executive Director of ICICI Bank guided margins to be in a range-bound direction, going ahead, unless there is a change in repo rates. They expect the Reserve Bank of India (RBI) to start shallow rate cuts soon, he added in ICICI Bank's post-earnings concall.

A positive highlight in ICICI Bank's fourth quarter scorecard was its strong deposit traction. Deposits grew by 20% YoY or 6% QoQ to ₹14.13 lakh crore in the fourth quarter of FY24, outpacing credit growth of 16% YoY or 3% QoQ at ₹11.84 lakh crore in the same period.

ICICI Bank's asset-quality picture was healthy as well in the fourth quarter, with gross non-performing assets declining by 14 basis points (bps) YoY to 2.16% in the fourth quarter of FY24, whereas net NPA slipped 2 bps YoY to 0.42% in the same period.

Apart from that, the lender maintained healthy return on asset (RoA) at 2.36% in FY24, justifying its premium valuation against peers, said analysts at Bernstein. ICICI Bank's RoA grew to 2.36% in FY24 from 2.2% in FY23. Emkay analysts believe the bank will deliver higher RoA over FY25-26E at 2.1-2.3%, on the back of healthy margins.

So far this year, the stock of ICICI Bank has surged over 11%, outperforming 3% gain in the benchmark Nifty 50 index.