Can ICICI Bank be a compounding machine? Here’s what Jefferies, Morgan Stanley, others say

Spread the love

In his Analyst Day Meet, the CEO of ICICI Bank reiterated the bank’s focus on return on capital through return on capital, building the most trusted brand and digital lead over peers. While no clear financial guidance was given, the bank said the focus would remain on calibrated operating profit and return on capital in turn, while asset quality would remain a cornerstone.

ICICI Bank CEO said India’s resilient macro structural changes in corporate and consumer behavior offer the best opportunity in 37 years for Indian banks.

Prabhudas Lilladher, who has a target of Rs 1,090 on the stock, said, “Our impression on the note was that ICICI Bank will continue to grow profitably by focusing on better customer experience.” ICICI Bank had closed at Rs 933.55 on Monday, up 0.30 per cent.

Elara Securities said the meeting underscores our belief that the bank is progressing well, taking the right steps and moving cleanly in its pursuit of excellence. Elara Securities has a target of Rs 1,100 on the stock, “We believe the bank’s focused outlook and consistent earnings distribution will underpin its permanent rerating, which will help establish higher-than-expected valuations over the previous cycle.” “

Jefferies said ICICI Bank’s Analyst Day focused on strategic initiatives and priorities. It added that the focus was on seamless customer journey, digitization and network expansion. SME, supply chain financing and retail were the focus segments, Jefferies said, adding that at the macro level the management has confirmed strong growth with improved retail borrower behavior and a healthy corporate balance sheet.

“Despite no path to near-term earnings growth, visibility of the growth runway remains positive,” Jefferies said. ICICI is one of our top picks.

Morgan Stanley said that ICICI Bank should continue to develop into a “compounding machine” and expects the re-rating to continue over the next few years. Morgan Stanley said given the size of the long-term growth opportunity, investors are willing to pay higher multiples for financials that have demonstrated strong earnings compounding and avoided bad debt cycles.

Morgan Stanley said, ‘We believe ICICI is well positioned for this.’

Nuwama Institutional Equities said macro tailwinds and strong execution make ICICI a winner.

“With increasing momentum on its bank-tech initiatives, we believe ICICI Bank is poised to maintain best-in-class profitability with digital leadership, increased market share across all segments. ‘One -Bank, One-ROE’ was the biggest. Learnings from the meeting – which once seemed very idealistic, are now being imbibed by RMs and branch staff as well, leading to a lumpier, business-growth-oriented approach in the DNA/culture. The key shift is taking place in a sustainable, granular profitability approach,” said Nuwama, adding that ICICI’s clear bank-tech leadership amid India’s digital revolution gives ICICI an edge over its peers.

Terming ICICI Bank as its top pick, the brokerage has a target price of Rs 1,115 on the stock.

Kotak Institutional Equities said it has an unchanged target on the stock at Rs 1,070 as it values ​​the lender at 2.8 times book and 19 times September 2024E EPS. It values ​​the subsidiary at Rs 175 per share.

“The bank is at a stage where a strong outperformance is unlikely, but we are comfortable to be positive given the strength of its market strategy. The sector is witnessing comfortable growth and benign credit costs. This means That outperformance is likely to be stronger with weaker franchises.”

Read also: LIC increases stake in Adani Enterprises, Adani Total Gas, Adani Transmission

Source link

Spread the love

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.