Despite the prevailing favoritism towards public sector banks, one private sector lender stands out as a top choice among experts: ICICI Bank. Despite the general trend, ICICI Bank maintains its status as a preferred choice for investors and analysts alike, thanks to its strong fundamentals, robust growth prospects and savvy management.
Let’s look at the fundamental and technical outlook for the stock over the long term. Why is it still a good buy? Here’s what experts say.
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Stock Price Trend
ICICI has given strong returns in the last one year, jumping over 27 percent against a 17 percent rise in Nifty Bank. Meanwhile, it also outperformed its benchmark in 2024 YTD, gaining over 9 percent against over 3 percent fall in Nifty Bank. The lender remains the best performing private bank this year and the only private sector lender in the Nifty Private Bank index to have given positive returns in 2024 YTD.
The stock has added 3.5 percent in March so far, extending gains for the fifth straight month since November 2023. Between November 2023 and March 2024, the stock has gained 19 percent.
It rose almost 3 percent in February as well as January 2024. Meanwhile, it jumped 6.6 percent in December 2023 and 2.1 percent in November 2023.
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Currently trading at ₹1084.85, the stock is just 2.5 percent away from its all-time high of ₹1,113.35, hit earlier this month on March 6, 2024. Meanwhile, it advanced 18.5 percent from its 52-week low of ₹844.25, effective March 27, 2023.
Revenues
In the quarter ended December 2023, ICICI Bank reported a 23.5 percent increase in its standalone net profit at ₹10,272 crore in return ₹8,312 crore in the year-ago period.
The net interest income (NII) of India’s second largest private sector lender rose 13.4 percent year-on-year. ₹18,678 crore in the quarter under review against ₹16,465 crore in the corresponding period last year. Meanwhile, its asset quality is improving with the gross non-performing asset (NPA) ratio declining to 2.30 percent in Q3FY24 from 2.48 percent in Q2FY24. The net NPA ratio was almost flat at 0.44 percent as on December 31, 2023, against 0.43 percent as on September 30, 2023.
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Technical View
Om Mehra, Technical Analyst, SAMCO Securities
ICICI Bank has consistently formed higher highs and higher lows in the weekly time frame. The stock traded within a defined range of ₹1,100-1,050 over the last two weeks and despite this consolidation phase, ICICI Bank Ltd. trades above its 20-day and 50-day moving averages.
In recent days, the delivery volume has increased marginally. This phase suggests a rally, indicating that the primary trend remains strong. The Relative Strength Index (RSI) has consistently held above the 55 levels, signaling strength in the stock.
Although Bank Nifty saw a decline of nearly 3.8% from its recent high swing, ICICI Bank remained resilient, holding strong above the key level of ₹1 054. Investors can consider accumulating the shares in stages for a long-term investment horizon.
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Rajesh Palviya, SVP – Technical and Derivatives Research, Axis Securities
The stock is in a solid uptrend through the time frame, forming a series of higher tops and bottoms. The stock is holding firmly above its 20-day SMA (1076), indicating a positive bias. It also supports above its 50, 100 and 200 day SMA, and these averages are rising and pushing prices higher. The daily, weekly and monthly strength indicator RSI is in favorable territory, showing increasing strength across all time frames. The short-term support zone is located around 1050-1040 levels. On the upside, the bullish sentiment may rise to 1130-1160 levels. Traders are advised to continue holding long positions and follow strict Stop Losses.
Rohan Shah – Technical Analyst, Religare Broking Ltd
ICICI Bank has been on a steady upward trend for over 5 months, and currently, the price is trading near record high levels. After hitting record-high levels (1113), it traded in a tight range with a positive bias. The stock is forming a high base at its rising short-term moving average (20 DEMA) and 161.8 percent external resistance line. We believe that traders can continue to hold their long positions, and as a stock trades at multiple support zones, it offers a decent risk-reward trading opportunity. In the near term, we expect the stock to gradually move higher towards the 1125 and 1160 levels, as long as it holds the 1050-1060 support zone.
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Fundamental View
Sharkhan: The brokerage has a buy call on the stock with a target price of ₹1,300, which implies an additional potential of 20 percent.
“ICICI Bank remains our top pick in the large private banking space and is well positioned to deliver superior performance despite cyclical headwinds. A consistent healthy loan growth trajectory and strong asset quality helps the bank sustain strong performance despite NIM compression. The bank continues to have negative outlook on NIMs, but is optimistic that it will be able to keep margins in line with FY23. NIM pressure is expected to be partially offset by contained opex growth,” it said
Sharekhan added: The sector also faces a challenge in terms of tight liquidity, which is likely to require faster deposit mobilization to support loan growth. For ICICI Bank, deposit growth remains in line with loan growth and LDR remains lowest among large private banks, so loan growth outlook continues to remain healthy for the bank. Overall, the outlook for asset quality continues to remain stable along with higher contingency provisions should keep credit costs lower. We believe the bank is likely to sustain RoA at over 2 percent in the near to medium term despite cyclical headwinds,” the brokerage said.
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 21 Mar 2024, 13:26 IST