IIFL Securities has upgraded ICICI Bank from “Add” to “Buy,” raising its target price to ₹1,480 from the previous ₹1,370. This revised outlook reflects the brokerage’s positive stance on ICICI Bank’s financial performance and resilience in the current market environment. At the current market price of ₹1,259.60, the new target implies a potential upside.
Key reasons for the upgrade
IIFL highlights three main reasons behind its decision to upgrade ICICI Bank:
- Normalization of Net Interest Margin (NIM) Pressures
According to IIFL, the pressure on ICICI Bank’s Net Interest Margins (NIM) has largely stabilized. Compared to its peers, ICICI Bank’s NIM resilience suggests that it can sustain higher profitability, particularly as interest rates settle and operational efficiencies improve. - Reduction in Operational Expenditure
ICICI Bank has recently made significant efforts to control its operational expenses, showcasing a sharp pullback in its spending. This cost-management approach supports the bank’s profitability and positions it well for sustainable earnings growth. - Better-than-Expected Asset Quality
Asset quality at ICICI Bank has been trending better than IIFL’s earlier projections. The bank has maintained strong metrics in terms of Non-Performing Assets (NPAs) and provisioning, demonstrating its ability to manage credit risk effectively.
Valuation Premium Narrowed Compared to HDFC Bank
IIFL also notes that ICICI Bank’s valuation premium relative to HDFC Bank has narrowed to 9%, despite expectations of 20-25% higher profitability by FY26. This narrowing premium suggests that ICICI Bank is attractively valued in comparison to its peer, providing a compelling entry point for investors looking at large-cap banking stocks.
With these positive factors in play, IIFL believes that ICICI Bank is well-positioned for growth, particularly with anticipated profitability gains over the coming years. Investors looking for robust financial stocks with strong fundamentals may find ICICI Bank an appealing addition to their portfolios, especially with IIFL’s revised target suggesting notable upside potential.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisors before making any investment decisions.
