ICICI Bank enters Rs 5 lakh crore m-cap club, stock up 39% so far in 2021

Shares of ICICI Bank rose 2 per cent to hit an all-time high of Rs 734.85 on BSE and the market cap of the lender rose to Rs 5,02,739.35 crore. It is the seventh Indian firm to enter Rs 5 lakh crore m-cap club and the second lender after HDFC Bank.
 
The large-cap stock has surged from Rs 527.5 to Rs 734.85 mark today. It has gained 39 per cent since the beginning of this year and risen 85 per cent in the last one year.
 
According to a report by Nirmal Bang, the asset quality impact seen in 1QFY22 will be transient in nature and improvement will be seen from 3QFY22 onwards. Assuming that the 3rd covid wave’s impact is not as severe as the previous waves, FY22E credit costs should be lower versus FY21.
 
“Throughout the pandemic period (5 quarters) so far, the stress formation in the non-wholesale/retail segment has been higher compared to the wholesale segment. Stress has been particularly higher in mortgage, CV, gold and MFI loans, among others. Our top picks (banks) are: ICICI Bank, HDFC Bank, IndusInd Bank, SBI and City Union Bank,” the report added.
 
According to MarketsMojo, the bank has declared positive results for the last 11 consecutive quarters and it has a high Capital Adequacy Ratio of 15.68% signifying high buffers against its risk-based assets.
Also, the technical trend has improved from Mildly Bullish on August 3, 2021, and the stock is technically in a Bullish range now. Multiple factors for the stock are bullish like MACD, Bollinger Band, KST and DOW. The stock is trading at a discount compared to its average historical valuations and with ROA of 1.5, it has a Fair valuation with a 3.3 Price to Book Value.
 
“The steady mix of high yielding portfolio such as Retail/Business banking portfolio, deployment of excess liquidity, and low cost liability franchise is aiding margin expansion. COVID 2.0 has disrupted collections, leading to elevated slippages in the Retail/Business Banking portfolio. However, the management is confident of improved asset quality trends over FY22, mainly from 2H onwards. Restructured loans remain under control at 0.7% of loans,” said Motilal Oswal.
 
The brokerage house has a ‘Buy’ rating on the stock with a target price of Rs 835 per share.
 
Recently, the Reserve Bank of India (RBI) has approved the re-appointment of Sandeep Bakhshi as the Managing Director & CEO of ICICI Bank, with effect from October 15. “RBI…has approved the re-appointment of Mr Sandeep Bakhshi as Managing Director & CEO of the Bank with effect from October 15, 2021, till October 3, 2023,” the bank said in a statement.
 
The ICICI Bank shareholders at the Annual General Meeting held on August 9, 2019, had already approved the appointment of Bakhshi for a period effective from October 15, 2018, up to October 3, 2023.
 
The bank had appointed Sandeep Bakhshi as the Managing Director and Chief Executive Officer after accepting former MD and CEO Chanda Kochhar’s request to seek early retirement in October 2018.