JPMorgan raises ICICI Bank stock price target on strong earnings

JPMorgan lifted its stock price target for ICICI Bank (NYSE:IBN) to INR1,800.00 from INR1,735.00, while keeping an Overweight rating. The bank's second quarter performance surpassed expectations, with net interest income rising 18% year-over-year to Rs 253.4 billion, exceeding JPMorgan's estimate. Pre-provision operating profit increased 19% year-over-year to Rs 205.8 billion, surpassing estimates.

Profit after tax climbed 20% year-over-year to Rs 148.4 billion, also above projections. Core net interest income, excluding interest on income tax refunds, grew 18% year-over-year, driven by 30% loan growth. The core net interest margin, excluding tax refunds, fell 4 basis points due to FCNR (B) deposits. The cost-to-income ratio was 38.4%, better than the estimated 41.2%.

ICICI Bank's return on equity was 16%, with a P/E ratio of 18.05 and a market capitalization of $105.3 billion. Despite the positive earnings, the bank noted margin compression ahead and a one-off funding boost from FCNR deposits.