ICICI Bank
Anchor: the compounding franchise
- Last close
- ₹1,292.20
- 29 Sept 2026 · reference
- 1D · 1M
- −0.8% · −9.2%
- price-only
- Weight
- 7.0%
- 31 Jul 2026 · Aug rank 1
- Thesis review
- 8 Sep 2026
- Why We Own, p27
Approved description
India's second-largest private bank (₹16 lakh crore of loans, 7,600 branches) and, on every measure we track, the best-run: ROA 2.2%, net NPA 0.4%, CET1 16%+, a 39% CASA franchise, the deepest technology stack in Indian banking and a subsidiary stable (ICICI Prudential Life, ICICI Lombard, ICICI Securities, ICICI Pru AMC) worth ~₹200 a share. Since the 2018 leadership change it has run a 'fair to customer, fair to bank' strategy that traded growth for risk-adjusted return and delivered both.
- 01The compounding machine: 15–16% ROE on a 16% CET1 base with 15–16% loan growth means book value per share compounds ~14% a year without dilution; over ten-year horizons that is what the share price does too.
- 02Best liability franchise among the growth banks: deposits grew 14% YoY in 1QFY27 with CASA at 39–41%, funding cost 4.4% (lowest of the big four) and a loan-to-deposit ratio of 89% that leaves room to grow.
- 03Asset quality with headroom: credit cost of 45–55 bp against a ₹13,100 crore contingency buffer (~0.8% of loans) that is not in our numbers; corporate book is investment-grade heavy and retail is secured-led.
- 04Fee engine: retail and payments fees growing mid-teens, plus subsidiaries whose value (~₹200/share, 20% holdco discount) we carry conservatively.
- 05House history: a top pick since 2018 and the largest position in the book. Our 12-month probability-weighted target is at the price — we own it for the certainty of the 14% compounding, not for a re-rating, and we would not add above 2.7x core book.
Reference close, with results-period markers
- 1Q Sep-25 end · 30 Sept 2025
- 2Q Dec-25 end · 31 Dec 2025
- 3Q Mar-26 end · 31 Mar 2026
- 4Q Jun-26 end · 30 Jun 2026
Quality score, technicals and Buoyant Score
Computing the scorecard…
Latest quarter · Q Jun-26
| Line (₹ cr) | Q Jun-26 | YoY | QoQ |
|---|---|---|---|
| Total Income | 79,689 | +6.9% | −5.8% |
| Interest Earned | 52,241 | +6.4% | +5.3% |
| PPOP | 22,604 | +6.0% | +7.6% |
| Net Profit | 15,440 | +13.9% | +4.6% |
Reported vs internal estimate: internal quarterly estimates are not in the supplied package; consensus feed not licensed. YoY/QoQ per PRD §12.5 (transitions, not %, on non-positive bases).
Position and valuation context
Bank preset: NII, PPOP, provisions, NIM, GNPA, CASA, ROA/ROE; P/B. Industrial leverage ratios suppressed.
Sell-side targets are third-party views, not Buoyant's; the upside is recomputed on our reference close, so it differs from the figure printed at the broker's price date.
Approved model
base TP ₹1,400 (-2%) (price basis 7–8 Sep 2026; internal, not for clients)
What we watch
- 2QFY27 results (Oct-26): NIM stabilisation above 4.2% (model basis) and deposit growth re-accelerating past 14%.
- Contingency-provision release or write-back as the agri/retail cycle stays benign.
- Return of FPI flows to Indian financials once the rupee and crude stabilise — ICICI is the first port of call.
- Valuation: at 2.5x core book the stock discounts an 18% ROE for a decade; any slip in growth or a credit-cost surprise above 60 bp would de-rate it 15–20%.
- Margin: NIM has fallen 25 bp since the rate cuts began; a further 15–20 bp compression without deposit repricing would cut FY27E EPS ~5%.
- FII selling: ICICI is among the largest foreign holdings in India; mechanical outflows can depress the multiple without touching fundamentals.