Prabhudas Lilladher has maintained its 'BUY' rating on ICICI Bank with a target price of ₹1,800, despite the bank's soft quarterly performance that missed analyst expectations.

Quarterly Performance Challenges

The bank experienced a challenging quarter with lower core revenue and elevated provisions leading to a core profit after tax (PAT) miss of 5.10%. Several factors contributed to this underperformance:

Net interest margins (NIM) came under pressure due to the bank's strategy of utilizing investments over cash towards lending activities. This shift followed the Cash Reserve Ratio (CRR) cut, with incremental credit growth being primarily driven by corporate lending and mortgage segments.

Fee Income and Provision Concerns

Fee income declined due to weak growth in unsecured lending products and competitive pressure on loan-related fees. The bank faced a significant one-time provision impact of ₹12.80 billion related to Priority Sector Lending (PSL) non-compliance involving loans worth ₹200-250 billion, following the Reserve Bank of India's annual review.

Key Concerns Addressed

Two primary concerns that had been weighing on the stock's performance have shown signs of improvement:

• Loan Growth Recovery: The bank has witnessed a pickup in loan growth momentum, which management expects to continue in upcoming quarters
• Management Stability: The board has approved MD & CEO Mr. Bakshi's term extension for two years until September 2028, which alleviates key management personnel risk

Future Outlook and Valuation

Despite the current quarter's challenges, Prabhudas Lilladher remains optimistic about ICICI Bank's long-term prospects. The brokerage expects the bank to achieve an industry-best core Return on Assets (RoA) of 2.20% for FY28E.

The firm maintains its multiple on September 2027 core Adjusted Book Value and keeps the target price at ₹1,800 while retaining the 'BUY' recommendation, suggesting confidence in the bank's ability to overcome current headwinds and deliver strong returns to investors.

Anand Rathi has issued a positive outlook on ICICI Bank , maintaining its BUY rating with a target price of ₹1,713. The brokerage firm's assessment comes after analyzing the bank's recent performance trends and strategic positioning in the competitive banking sector.

Financial Performance Analysis

The bank's core financial metrics demonstrated steady progress during the reporting period. Key performance indicators showed consistent growth across multiple parameters:

Excluding one-time items, the bank's operational trends aligned with market expectations. The core pre-provision operating profit growth of 6.9% year-on-year, coupled with a 3.4% quarter-on-quarter increase, reflects the bank's operational efficiency.

Credit Growth and Asset Quality

Credit growth emerged as a significant highlight, accelerating to 11.5% year-on-year compared to 10.3% year-on-year in Q2FY26. This acceleration indicates strengthening loan demand and the bank's ability to capture market opportunities effectively.

Despite the seasonal challenges typically associated with the reporting quarter, asset quality remained stable. Net interest margins also maintained their stability, demonstrating the bank's pricing discipline and portfolio management capabilities.

Leadership and Strategic Outlook

A notable corporate development was the board's decision to re-appoint Mr. Bakhshi as CEO until October 2028. Anand Rathi views this leadership continuity as a positive development for the bank's strategic direction and operational consistency.

Management has provided guidance indicating an acceleration in credit growth going forward, suggesting confidence in the bank's growth trajectory and market positioning.

Valuation and Investment Rationale

Anand Rathi's target price methodology incorporates comprehensive valuation parameters:

The brokerage expects further acceleration in retail-led growth and stable asset quality, projecting the return on equity to remain above 15%. This expectation underpins their positive investment thesis and preference for ICICI Bank over HDFC Bank.

Competitive Positioning

Anand Rathi maintains its preference for ICICI Bank over HDFC Bank, citing the former's relatively better positioning to manage the growth-margin trade-off. This strategic advantage is expected to help ICICI Bank maintain its return on equity differential over HDFC Bank, supporting the positive investment recommendation.