HSBC Optimistic on ICICI Bank’s Prospects

ICICI Bank's share price was a notable gainer on the Indian markets today, adding 2.96% and leading the BSE Sensex, as HSBC upgrade their price target on the stock.

In a move that signals confidence from the analysts at HSBC, the price target has been raised for ICICI Bank shares from INR1,460 to INR1,520 while maintaining a “Buy” rating. Analysts at HSBC base this optimistic outlook on the strong metrics delivery and increased value creation evident in the bank's subsidiaries.

HSBC's revised valuation pegs ICICI Bank at 3 times its predicted FY26 book value per share, rising from the earlier 2.9 times. This reassessment underlines a deeper faith in the bank's future performance coupled with the progressive contributions of its subsidiaries. ICICI Prudential Life Insurance and ICICI Lombard General Insurance, in particular, stand out as key drivers behind the raised target.

The noteworthy performance data bolstering HSBC's stance include a significant jump in ICICI Bank's consolidated profit after tax, concurring with both Indian and U.S. GAAP, and a solid stockholders’ equity position per the U.S. GAAP.

Moreover, ICICI Bank's robust positioning in the financial sector is revealed by the consistent “Buy” ratings from well-regarded institutions such as Kotak, Jefferies, Citi, and CLSA. Axis Capital, not far behind, has shifted its perspective from “Buy” to “Add,” pointing to the bank’s unswerving earnings growth.

ICICI Bank, bearing a market capitalisation of $107.92 billion, reflects strong revenue advancement over the past year—further solidifying HSBC's positive outlook on the bank's prospects. This is complemented by the bank's commitment to shareholder returns, demonstrated through four consecutive years of dividend increments, and a present dividend yield of 0.68%.

Investors also take comfort in the numbers with a Price-Earnings (P/E) ratio of 18.98, Price to Book (P/B) ratio of 3.24, and an operating income margin of 31.2%. These figures not only indicate effective operations but also reaffirm investors' confidence in the bank's financial health.