Geojit Investments Limited has upgraded its stance on ICICI Bank to a BUY recommendation, setting a revised target price of Rs 1,568, reflecting a 14% expected upside from the current market price of Rs 1,372. The research highlights robust loan growth, stable asset quality, and resilient margins as catalysts for long-term scalable profitability. The bank's strategic emphasis on risk-calibrated growth and improved profitability metrics, including net interest income and pre-provision operating profit, underpin this positive outlook despite competitive pressures and cyclical challenges such as the Kisan Credit Card (KCC) season. Investors are advised to consider this upgraded view for potential medium-term gains.

Geojit’s Upgraded Call

Geojit Investments Limited, after a thorough financial and operational review of ICICI Bank, has upgraded the stock from HOLD to BUY. This upgrade aligns with the bank's steady quarterly results in Q2FY26 showing a 7.4% year-on-year rise in net interest income and a 5.2% increase in reported profit after tax to Rs 12,359 crore. The revised target price of Rs 1,568 is derived from a sum-of-the-parts (SOTP) valuation reflecting the combined valuation of subsidiaries and the core banking business, suggesting an attractive 14% upside from the current price level.

Key Financial Performance Highlights

- Net Interest Income (NII) rose 7.4% YoY to Rs 21,529 crore in Q2FY26, driven by a 10.3% increase in total advances and lower cost of deposits at 4.64%, down by 20 basis points YoY. - Pre-Provision Operating Profit (PPOP) witnessed a 3.4% YoY increase to Rs 17,298 crore despite a 17.3% rise in operating expenses influenced by investment in growth initiatives. - Provisioning levels fell significantly by 25.9% YoY, improving overall profitability and reflecting healthier asset quality. - Net interest margin (NIM) expanded slightly by 3 basis points to 4.3%, supported by favorable repricing of loans and investments. - Total deposits increased 7.7% YoY to Rs 1,612,825 crore, with term deposits, savings, and current deposits witnessing steady growth.

Loan and Deposit Growth Dynamics

Geojit highlights the bank’s expanding loan book at Rs 1,408,456 crore, with standout performance in business banking segment growing by 24.8% YoY and retail loans up by 6.6%. Domestic corporate loans grew modestly by 3.5%, while rural loans softened by 1.3%. Deposit growth remains balanced with a 7.7% YoY increase driven by a 7.3% rise in term deposits and a 12.9% rise in current account deposits, supporting stable funding costs.

Valuation and Target Price Calculation

Geojit’s SOTP valuation incorporates multiples on various business segments of ICICI Bank and its subsidiaries:

This detailed breakdown underpins the target price of Rs 1,568 per share.

Investment Levels and Targets

- Current Market Price (CMP): Rs 1,372 - Recommended Buy Level: At or below CMP due to the attractive upside - Target Price: Rs 1,568 (14% upside potential) - Stop Loss: A prudent investor might consider a stop loss near Rs 1,300, reflecting a buffer to manage downside risk - Time Horizon: 12 months, consistent with the research house’s valuation period

Operational and Strategic Outlook

Geojit underscores the bank's strategy focusing on synchronized growth and profitability, avoiding prioritizing growth at the cost of profitability. The bank is expected to maintain healthy capital adequacy ratios with a robust Tier I capital of 17.2%, supporting growth initiatives. The NIM is forecasted to remain stable or range-bound, benefiting from ongoing deposit repricing and the anticipated full impact of the recent Cash Reserve Ratio (CRR) cut in Q3FY26. Despite seasonal upticks in non-performing assets (NPAs) linked to the Kisan Credit Card segment, overall asset quality remains stable with low net NPAs around 0.4%.

Financial Metrics Snapshot

- Return on Equity (RoE) is healthy at 16.7% in FY26E, slightly declining as the bank expands but staying robust. - Return on Assets (RoA) is steady at 2.3%, reflecting efficient asset utilization. - Cost-to-Income ratio remains competitive at 38.3%, indicating strong operational discipline. - CASA ratio is stable around 41.1%, supporting cost-effective funding.

Conclusion for Investors

Given ICICI Bank’s demonstrated earnings growth, solid asset quality, and strategic foresight, Geojit’s BUY recommendation and target price of Rs 1,568 suggest a compelling entry point for investors seeking a large-cap bank stock with a balanced risk-return profile. The bank's ability to navigate competitive pressures while delivering sustainable profitability growth justifies investor confidence over the next 12 months.