ICICI Bank's share price is expected to surge as much as 34% in the coming year — despite having more loans under moratorium than other lenders

• Even though ICICI Bank missed the market rally, analysts still believe that India’s second-largest lender will come out on top by the end of year.
• ICICI Bank’s share price has lost 28% of its value since January but could be back up by as much as 34% as per brokerage firm Edelweiss.
• Analysts believe that ICICI Bank remains the best placed to weather the bad loans storm

India’s financial sector may look shrouded in gloom-and-doom, but India’s second-largest private lender, ICICI Bank, remains the world’s favourite banking stock.
Bloomberg data indicates that ICICI Bank has 56 ‘buy’ recommendations with a consensus rating of 4.95 out of 5, ranking it the highest among the top 50 global banks.

Even though it missed the market rebound rally, analysts are still positive that things will turn around for the $32 billion lender despite it having a higher percentage of loans under moratorium in comparison to peers.

Its share price has lost 28% of its value since January. Yet, analysts expect the stock to revive in the coming year. Edelweiss is most optimistic with a target price of ₹525 — a 34% jump from yesterday’s closing price of ₹389.75.


Today, ICICI Bank’s share value rallied by nearly 1% as markets opened after its board of directors approved the sale of over 6.4 million equity shares in ICICI Securities at a face value of ₹5 each.

^{*Growth calculated using closing price as of Aug 26}

While the moratorium risks remain high, the bank has created ample buffers against bad loans and profit growth despite adding provisions.ICICI bank looks best placed to weather this storm as the moratorium on loan repayments expires on August 31.

^{Source: Jefferies}

Bad loans or not, ICICI Bank has it covered
Being a large private sector bank, JM Financial forecasts that ICICI Bank is likely to see limited impact from the moratorium even with 17.5% of loans opting to delay their interest payments.

Even though margins dropped and there is a slowdown in credit demand, ICICI Bank still managed to post 36% yearly growth in profit at the end of the first quarter. Supported by core earnings, HDFC Securities estimates that ICICI Bank’s profit is likely to register a sharp 52% growth by the end of the year despite the volatility of 2020.



The bank was lauded for ‘prudently’ using its gains from the treasury and stake sale in insurance arms by Motilal Oswal Securities. At the end of June, ICICI Bank’s COVID-19 related buffers amounted to ₹82.8 billion — covering 1.3% of loans.

Merrill Lynch picks up ₹341 crore worth of ICICI Bank shares
Betting on the bank's growth, Merrill Lynch Markets Singapore picked shares worth ₹341 crore from Societe Generale. Data with the Bombay Stock Exchange (BSE) shows that the block deal was more 90 lakh shares were sold at ₹378.6 apiece.

This is the second time that Merrill Lynch has bought into ICICI Bank within the last six months.

Earlier this month, the bank confirmed that it will be raising funds through a qualified institutional placement (QIP) of its equity shares at a floor price of ₹351.36 per share. It has since closed its QIP and raised ₹15,000 crore.



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