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Dolat Capital Report
ICICI Bank Ltd. posted robust quarter with steady net interest margin at 4.4% (-3 bps), healthy pre-provision operating profit growth at 17% YoY driven by contained opex, sustained improvement in asset quality metrics with slippages at 1.8%, and healthy loan growth in retail and SME/BB (at 4% and 5% respectively) driving return on asset of 2.4%.
Management expects moderation in opex growth to sustain, barring seasonality around annual increments.
Margins will continue to decline but are expected to remain range-bound until rate cuts. Credit costs should be less than 50 bps in FY25E.
We factor in slightly lower opex and credit costs, resulting in 4-5% earnings upgrade over FY25/26E.
Maintain ‘Buy' rating at SOTP based target price of Rs 1325 (from Rs 1250 earlier), valuing standalone bank at 2.7 times FY26E price/adjusted boojk value against RoA/RoE of 2.1%/17% and adding value of subsidiaries.
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