Motilal Oswal Financial Services (MOFSL) has reaffirmed its "Buy" recommendation on ICICI Bank, raising the target price to Rs 1,550, implying a potential upside of 28% from the current market price of Rs 1,209. The bullish outlook is driven by steady profitability, stable asset quality, and controlled operating costs. The bank continues to outperform its peers with robust loan growth, improved return ratios, and a strong capital position. This report dissects ICICI Bank’s Q3FY25 financial performance, technical analysis, and investment potential for long-term investors.

Q3FY25 Financial Performance: Steady Growth Amid Uncertainty

ICICI Bank delivered another strong quarter, surpassing earnings estimates while maintaining a healthy asset quality and cost discipline. Key highlights include:

1. Profitability:

Net profit (PAT) stood at Rs 117.9 billion, growing 15% YoY, exceeding estimates by 3%.
Annualized Return on Assets (RoA) was 2.36%, while Return on Equity (RoE) stood at 18.9%.
2. Interest Income and Margins:

Net Interest Income (NII) increased 9.1% YoY to Rs 203.7 billion.
Net Interest Margin (NIM) moderated slightly by 2 basis points (bp) QoQ to 4.25%, due to higher funding costs.
3. Business Growth:

Advances grew 13.9% YoY and 2.9% QoQ, driven by business banking (up 6.4% QoQ) and retail loans (up 1.4% QoQ).
Deposit growth was 14.1% YoY, with CASA (Current and Savings Account) deposits improving to 39%.
4. Asset Quality:

Gross Non-Performing Asset (GNPA) ratio declined to 1.96%, reflecting improved risk management.
Net NPA ratio remained stable at 0.42%, while Provision Coverage Ratio (PCR) stood at 78.7%.

Segment-Wise Performance

ICICI Bank continues to exhibit balanced growth across multiple business segments:

1. Retail and Business Banking:

Retail loans grew 10.5% YoY, supported by strong credit card and mortgage growth.
The business banking portfolio expanded by 31.9% YoY, with a 6.4% sequential growth.
2. Corporate and SME Lending:

Corporate loan book grew 4.3% QoQ, maintaining steady expansion.
Small and Medium Enterprises (SME) segment remained stable, with limited stress on asset quality.
3. Deposit Growth and Liquidity Management:

Deposits increased by 14.1% YoY, despite slower CASA growth.
The Loan-to-Deposit Ratio (LDR) stood at 86.5%, indicating a healthy balance of liquidity and lending activity.

Technical Analysis: Key Levels for Traders

A technical examination of ICICI Bank's daily candlestick chart reveals:

1. Candlestick Patterns:

Bullish breakout above Rs 1,200, supported by increasing volume.
The stock is trading above the 50-day and 200-day moving averages, indicating strong bullish momentum.
2. Fibonacci Retracement Levels: Using the recent 52-week high of Rs 1,362 and low of Rs 985, the Fibonacci levels suggest:

38.2% Retracement: Rs 1,225
50% Retracement: Rs 1,175
61.8% Retracement: Rs 1,135
A break above Rs 1,225 could push the stock toward Rs 1,300, while support exists at Rs 1,135.

3. Support and Resistance Levels:

Key Support: Rs 1,175 and Rs 1,135
Immediate Resistance: Rs 1,250 and Rs 1,300
Trading Insight:
Short-term traders may consider accumulating near Rs 1,175, with a target of Rs 1,250-1,300. Long-term investors should hold with a target of Rs 1,550.

Comparison with Industry Peers

ICICI Bank continues to outperform major private sector banks such as HDFC Bank and Axis Bank in terms of profitability and asset quality.

Investment Outlook: Why ICICI Bank is a Strong Buy

MOFSL’s "Buy" rating is supported by:

Resilient Financial Performance:

PAT growth of 15% YoY, with steady revenue expansion.
Controlled operating expenses, improving efficiency.
Stable Asset Quality:

GNPA at 1.96%, Net NPA at 0.42%, among the lowest in the sector.
Provisions remain moderate, ensuring financial stability.
Valuation Upside:

Trading at 2.5x FY27E Adjusted Book Value, with a 28% upside to Rs 1,550.

Conclusion

ICICI Bank remains a top-tier banking stock, combining strong fundamentals, steady loan growth, and superior asset quality. The bank’s prudent risk management and digital transformation strategy provide a competitive edge. With an upside potential of 28%, investors can accumulate the stock with a long-term target of Rs 1,550. Traders should watch support at Rs 1,175 and resistance at Rs 1,250-1,300 for short-term movements.

As India’s economic expansion continues, ICICI Bank is well-positioned for sustained profitability and shareholder value creation.