What should investors do with ICICI Bank after Q1 results: buy, sell or hold?

Stocks

The bank’s Q1FY22 gross NPA stood at 5.2 percent against 5 percent QoQ while net NPA came at 1.2 percent against 1.1 percent QoQ.

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ICICI Bank share price was trading lower by over a percent at open on July 26 after the bank declared its Q1 results.

The private banking major on July 24 posted a 77.6 percent year-on-year (YoY) jump in June quarter standalone net profit at Rs 4,616 crore. The bank’s profit was Rs 2,599.2 crore in the corresponding quarter of the previous financial year and Rs 4,402.6 crore in Q4FY21.

Also read:¬†ICICI Bank’s Q1 profit jumps 78% YoY to Rs 4,616 crore; NIM comes at 26-quarter high at 3.89%

The profit figure was below a poll of analysts done by CNBC-TV18 which had estimated the number at Rs 4,821.8 crore. Core operating profit (profit before provisions and tax, excluding treasury income) grew by 23 percent YoY to Rs 8,605 crore in Q1FY22.

The bank’s net interest margin (NIM) came at a 26-quarter high at 3.89 percent against 3.84 percent QoQ. Net interest income (NII) for the quarter grew 17.8 percent YoY at Rs 10,935.7 crore which was above the CNBC-TV18 poll of Rs 10,614.4 crore.

The bank’s Q1FY22 gross NPA stood at 5.2 percent against 5 percent QoQ while net NPA came at 1.2 percent against 1.1 percent QoQ. Gross NPA stood at Rs 43,148.3 crore against Rs 41,373.2 crore QoQ. Net NPA remained at Rs 9,305.8 crore against Rs 91,80 crore QoQ.

The stock was trading at Rs 665.15, down Rs 11.50, or 1.70 percent. It has touched a 52-week high of Rs 681.40. It has touched an intraday high of Rs 681.40 and an intraday low of Rs 663.90.

Here is what global brokerages have to say about the stock and the company after Q1 earnings:

Morgan Stanley | Rating: Overweight | Target: Raised to Rs 900

ICICI Bank remains the top pick in the banking sector, said a Morgan Stanley report.

Analyzing Q1 results, it said, Slippages were elevated and above our estimates, but net slippages were in-line given the strong recoveries. Provision write-backs helped manage credit cost.

CLSA | Rating: Buy | Target raised to Rs 940

The Bank is now consistently delivering sector-best growth in loans/core pre-provision operating profit. With normalisation of retail credit costs in H2, we expect credit costs to settle 90 bps over FY23/24. With 1 percent-6 percent higher earnings estimates, we expect RoRWA of 2.7 percent, which is 30 percent higher than last upcycle.

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Nomura | Rating: Buy | Target raised to Rs 790

The bank posted strong core PPoP, but asset quality surprises negatively. Expect RoE normalisation to 15 percent by FY23. The bank is positioning towards right customer selection. It is working towards having a greater share of profit & payment pools.

JP Morgan | Rating: Overweight | Target: Rs 675

The retail slippages increase was driven by second wave; core PPoP growth remains robust. The bank expects moderation in slippages in coming quarters. We believe coming quarters should be better for growth and asset quality.

Bernstein | Rating: Outperform | Target: Rs 790

The digital focus is leading to granular loan growth with guided lower incremental NPAs in coming quarters. Margin at an all-time high aided by low cost of funds. Loan growth and margin expansion led to a 23 percent YoY growth in operating profit.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.