ICICI Bank stock rises over 8% on attractive valuations, strong operating margins

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ICICI Bank stock rises over 8% on attractive valuations, strong operating margins

The ICICI Bank stock rose in early trade on Tuesday after the private sector lender reported its smallest quarterly profit in two years on rise in provisioning for bad loans. The Q4 earnings met analysts estimates and brokerages see further upside in the stock which took the share price higher today. The stock closed 2.5% higher at 289.40 on BSE yesterday before the earnings were announced.

At 12:03 pm, the stock was trading 8.15% or 23 points higher at 313.75 level on BSE. On the NSE too, the stock rose 8.09% at 313.65 level. It is set for its biggest gains since October 2017.

The stock is the top Nifty and Sensex gainer today. The stock opened at 302 level today logging a gain of 4.53% and hit an intra day high of 314 level.  

The stock has been gaining for the last 4 days and is up 11.35% during the same period.  

The stock is down 1.70% since the beginning of this year. The ICICI Bank stock rose 12% during the last one year. Its market capitalisation rose to Rs 1,98,298.65 crore on the BSE.

The stock hit a 52-week high of 365.65 on January 29, 2018 and a 52 week low of 256 on October 24, 2017, respectively.

Stock recommendations

The stock is fairly valued and analysts see up to 48% upside in the long term.

Nitin Aggarwal at Motilal Oswal has given a 'buy' recommendation on ICICI Bank stock with a target price of 380.  "We reiterate Buy with an SOTP of Rs 380 (from Rs 370), which corresponds to 1.7 times March 20E above book value, " Motilal Oswal said in a note.

R Sreeshankar at Prabhudas Lilladher has given an accumulate call on the stock with a target price of Rs 348.

Credit Suisse has an outperform position on the stock with a cut in target price Rs 357 from Rs 405, implying a return of 23%.  It said the operating performance of the private sector lender is yet to improve and about 15% of the loan book has converted into NPAs. The bank has a strong capital position, and valuation of the stock still remains attractive.

CLSA  has a buy recommendation on the stock with a target price of Rs 430, implying returns of 48%. Operationally, the earnings figures of the bank were largely in-line with estimates.   

Healthy Casa growth and focus on de-risking were the key positives for the bank. Improvement in asset quality will be crucial to re-rating in the ICICI Bank stock. It is CLSA's top pick.

Morgan Stanley maintains an overweight position on the stock with a 12 month target price of Rs 425, implying a return of 47%. Focus on asset quality is a key outcome from Q4 earnings which is positive.

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