ICICI Bank's Q1 Results Earn Broker Praise: Analysts Predict Further Re-Rating

ICICI Bank stock climbed more than 2% to ₹1,237 per share on July 29, driven by strong first-quarter results for FY25 and significant treasury gains. Brokerages remain optimistic about the bank due to its excellent asset quality, loan-to-deposit ratio (LDR), and profit margins compared to its competitors.

Shortly after trading began, the ICICI Bank share price rose by 2.04% to ₹1,231.85 each. On the BSE, the stock was up 1.6% at ₹1,227.75.

Nuvama Institutional Equities has retained a 'buy' rating for ICICI Bank, setting a target price of ₹1,450 per share, citing the bank's potential to surpass its peers. "The bank delivered robust Q1FY25 results, excelling in asset quality, LDR, and NIM," they commented.

Similarly, Macquarie, Morgan Stanley, and InCredit Equities expressed bullish sentiments, with target prices of ₹1,300, ₹1,500, and ₹1,450 per share, respectively.

Macquarie analysts pointed out that profit figures were in line with expectations, and higher fee income compensated for the growth in operating expenses. Morgan Stanley analysts predict the stock will perform well after Q1FY25, attributing this to ICICI Bank's return on assets (RoA) being above normalized levels and its ability to handle potential margin normalization. InCred Equities commended ICICI Bank for its stable credit growth and effective asset quality management.

As India's second-largest private lender, ICICI Bank reported a 14.6% year-on-year (YoY) increase in net profit to ₹11,059 crore in Q1FY25, propelled by strong loan growth, robust core lending income, and solid treasury operations. The bank's net interest income (NII) rose by 7.4% YoY to ₹19,553 crore in Q1FY25.

These results exceeded expectations, as an average of projections from seven brokerages tracked by Moneycontrol had predicted a 10% YoY increase in net profit and a 7% YoY rise in NII.

Operationally, ICICI Bank experienced a 16% YoY growth in loans, while average deposits grew by 18% YoY for the quarter ending in June. However, increased funding costs lowered margins by 42 basis points (bps) to 4.36% in Q1FY25 from 4.78% in Q1FY24.

In terms of asset quality, the gross non-performing assets (NPA) ratio slightly decreased to 2.15% in Q1FY25 from 2.16% in Q4FY24. The net NPA stood at 0.43%, up from 0.42% in the previous quarter.

So far this year, ICICI Bank's shares have surged over 21%, surpassing the Nifty 50 benchmark's 14% rise during the same period.

ICICI Bank Ltd offers a comprehensive suite of financial services, catering to both personal and corporate clients, including investment banking, private banking, venture capital, life and non-life insurance, securities broking, and asset management. The bank serves corporate entities, retail customers, high-net-worth individuals, and small to medium-sized enterprises (SMEs). Its product portfolio includes a variety of deposit accounts such as savings and current accounts, resident foreign currency accounts, investment products, and consumer and commercial cards.
 
ICICI Bank provides lending options for various purposes including home purchases, commercial business needs, automobiles, personal requirements, and agricultural activities. The bank also offers services such as foreign exchange, remittances, import and export financing, advisory services, trade services, personal finance management, cash management, and wealth management. It operates in multiple regions including Europe, the Middle East, and Africa (EMEA); the Americas; and Asia. ICICI Bank's headquarters are located in Mumbai, Maharashtra, India.