Goldman’s “buy” rating on ICICI Bank comes with a revised price target of ₹2,000 from ₹1,935 earlier. This is also the highest price target on the street for ICICI Bank among the analysts who cover the stock.
In fact, the second-largest private lender of the country is a “consensus buy”, as all 53 analysts covering it have a “buy” rating on it.
Goldman Sachs wrote in its note that ICICI Bank’s mobilization of $17.9 billion worth of FCNR deposits, accounts for 14% of the total deposit pool mobilized by the entire banking system. This is also significantly higher than its overall deposit market share of 6.7%.
The brokerage also believes that ICICI Bank’s 50% share of un-levered deposits is likely to be relatively higher than its peer banks.
With the kind of FCNR deposits raised, ICICI Bank’s Liquidity Coverage Ratio (LCR) is likely to improve by 40 percentage points, excluding the impact of the overseas balance sheet, assuming everything else remains equal, Goldman Sachs said in its note, adding that this will further strengthen ICICI Bank’s already favourable starting liquidity position.
Based on this, Goldman Sachs has raised its Earnings Per Share (EPS) estimates on ICICI Bank by 0.4% to 3% over the next three years.
For the June quarter, ICICI Bank’s Net Interest Income rose 12.7% from last year to ₹24,384 crore, surpassing expectations, led by healthy loan growth and resilient margins.Its asset quality also remained best in class with gross and Net NPAs both improving from last year.
The bank also maintained its contingency provision buffer of ₹13,100 crore, underscoring its conservative provisioning approach as well.
Shares of ICICI Bank ended little changed on Monday at ₹1,423.6. The stock is up 6.5% so far this year, comfortably outperforming its rival HDFC Bank, whose shares are down over 25% so far this year.
ICICI Bank now has a market capitalization of ₹10.24 lakh crore, which is now only ₹70,000 crore lower than the market capitalization of HDFC Bank, which stood at ₹10.95 lakh crore, at the close of trading on Monday.
