Motilal Oswal Financial Services has reiterated its BUY recommendation on ICICI Bank, assigning a target price of Rs 1,750, implying an upside potential of about 41% from the current market price of Rs 1,242. The brokerage believes the private sector lender is entering a phase of sustained earnings expansion supported by broad-based loan growth, a superior liability franchise, stable margins, and industry-leading asset quality. Despite muted stock performance over the past year amid foreign institutional investor selling across banking counters, ICICI Bank continues to gain market share in key lending segments. Motilal Oswal expects the bank to deliver healthy profitability, strong balance-sheet growth, and consistent shareholder returns over the medium term.

Motilal Oswal Maintains Conviction on ICICI Bank’s Long-Term Growth Story

ICICI Bank remains one of the brokerage’s highest-conviction ideas within the Indian banking sector. According to Motilal Oswal, the lender has successfully built a business model that balances growth, profitability, and risk management. The bank's diversified lending portfolio, deep deposit franchise, and technological investments position it favorably against peers.

The research house expects ICICI Bank to sustain its leadership position while continuing to deliver above-industry growth rates across both retail and commercial lending segments.

Credit Growth Momentum Expected to Stay Strong

The bank is projected to deliver a loan CAGR of approximately 16% between FY26 and FY28.

Growth is expected to be driven primarily by:

Business banking
SME financing
Personal loans
Corporate lending recovery
Mortgage expansion

Business banking has emerged as a particularly important growth engine, contributing roughly 21% of the overall loan portfolio. The corporate segment is also showing signs of stronger demand, allowing the bank to exercise better pricing discipline.

While growth in credit cards and certain vehicle financing categories has remained subdued, management has witnessed improving momentum in personal loans over recent quarters. This trend is expected to continue.

Deposit Franchise Continues to Provide Competitive Advantage

One of ICICI Bank’s biggest strengths remains its robust liability franchise.

The bank continues to attract deposits through multiple channels, including:

Salary account relationships
Corporate banking ecosystems
Transaction banking
Digital acquisition platforms
Expanding branch network

Rather than aggressively chasing expensive deposits, management remains focused on building a sustainable retail deposit base. This disciplined strategy has enabled the bank to maintain healthy liquidity metrics.

Motilal Oswal expects deposits to grow at nearly 15% CAGR during FY26-FY28, providing sufficient support for future loan expansion.

Liquidity Position Remains Among the Strongest in the Industry

The bank's liquidity profile provides substantial room for future growth.

Key indicators include:

These metrics compare favorably with many large banking peers and provide flexibility to pursue growth opportunities without compromising balance-sheet stability.

Margins Poised for Stability After Recent Pressure

Net Interest Margins appear to have bottomed out and are expected to improve gradually.

After declining to approximately 4.3% during FY26, margins are forecast to recover toward the 4.4%-4.5% range over the next two years.

Several factors support this outlook:

Stable interest-rate environment
Improving personal loan growth
Better pricing power in corporate lending
Strong risk-adjusted pricing discipline

Although elevated wholesale funding costs and slower CASA growth across the industry remain challenges, management believes margin pressure is largely behind the bank.

Technology Investments Supporting Operational Efficiency

ICICI Bank continues to invest aggressively in technology while preserving cost leadership.

Technology-related spending now accounts for nearly 10% of total operating expenses and has expanded more than threefold over recent years.

The bank is increasingly deploying:

Generative AI applications
Fraud detection systems
Audit automation
Risk management solutions
Operational efficiency tools

Despite these investments, the lender remains one of the most efficient operators in the sector. Motilal Oswal expects the cost-to-income ratio to improve toward approximately 38% by FY28 as operating leverage strengthens.

Asset Quality Remains a Core Strength

Perhaps the strongest pillar of the investment thesis is ICICI Bank’s asset-quality profile.

The lender continues to benefit from:

Conservative underwriting standards
Strong recovery mechanisms
Advanced analytics-driven monitoring
Granular retail recoveries

Provisioning buffers remain healthy, with contingency reserves equivalent to roughly 0.9% of loans.

Motilal Oswal expects asset quality metrics to improve further:

The brokerage also notes that the bank currently faces limited risk from the West Asia geopolitical situation and expects minimal disruption from the Expected Credit Loss (ECL) transition framework.

Earnings Outlook Remains Attractive

Motilal Oswal forecasts healthy earnings growth over the next several years.

Key projections include:

The brokerage estimates profit after tax growth of roughly 15% CAGR between FY26 and FY28.

Valuation and Investment View

Motilal Oswal believes the market is underappreciating ICICI Bank’s earnings durability and market-share gains.

While the stock has underperformed over the past year due to broader sector de-rating and sustained foreign investor outflows, the brokerage expects improving fundamentals to drive a gradual valuation re-rating.

The target valuation is based on 2.5x September 2027 estimated standalone adjusted book value.

Key Stock Levels

Conclusion

ICICI Bank continues to distinguish itself through balanced execution across growth, profitability, funding, and asset quality. The bank’s expanding presence in business banking, healthy corporate lending revival, superior deposit franchise, strong liquidity profile, and disciplined risk management provide a compelling foundation for future earnings growth. With return ratios expected to remain among the strongest in the sector and valuation multiples still reasonable relative to long-term prospects, Motilal Oswal believes ICICI Bank remains one of the most attractive large-cap banking opportunities available to investors today.