ICICIBANK - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.3

📊 Financial Overview: ICICI Bank maintains a strong financial profile with a ROE of 17.8% and EPS of ₹69.6, supported by a quarterly PAT of ₹12,359 Cr. While ROCE is modest at 7.61%, the bank’s P/E ratio of 19.4 is slightly above the industry average of 14.6, but justified by its growth and quality. The PEG ratio of 0.73 indicates undervaluation relative to earnings growth. The debt-to-equity ratio of 5.58 is typical for banks, reflecting their leveraged business model. PAT dipped slightly QoQ, but YoY growth remains healthy.

💼 Business Model & Competitive Edge: ICICI Bank is one of India’s leading private sector banks, offering a full suite of retail, corporate, and digital banking services. Its strong digital infrastructure, diversified loan book, and stable asset quality provide a competitive edge. The bank continues to invest in technology and customer experience, positioning itself well for long-term growth.

📉 Valuation & Entry Zone: Trading below its 50 DMA (₹1,394) and 200 DMA (₹1,369), ICICI Bank is in a technical correction. With RSI at 42.4 and MACD at -6.50, momentum is weak. A favorable entry zone lies between ₹1,300–₹1,325, offering a good long-term accumulation opportunity.

📈 Long-Term Holding Guidance: ICICI Bank is a strong long-term hold due to its consistent earnings, digital leadership, and robust fundamentals. Investors should monitor loan growth trends and asset quality metrics for sustained performance.

✅ Positive

• Strong ROE and EPS support earnings quality
• PEG ratio of 0.73 indicates undervaluation
• Stable asset quality and diversified loan book
• DII holdings increased by 1.15%

⚠️ Limitation

• ROCE is modest compared to peers
• QoQ PAT decline from ₹12,768 Cr to ₹12,359 Cr
• FII holdings declined by 1.21%

📉 Company Negative News

• Stock fell over 2% post Q2 results amid growth concerns
• Loan growth moderated to 3.2% QoQ; deposits remained flat

📈 Company Positive News

• CLSA maintained “outperform” rating with ₹1,700 target
• Asset quality stable; ECL impact expected to be minimal
• 5-year return of 247.6% highlights long-term performance

🏭 Industry

• Banking sector benefits from rising credit demand and digital adoption
• Private banks outperform PSUs in profitability and asset quality
• Industry P/E of 14.6 reflects moderate valuation

🧾 Conclusion

ICICI Bank is a fundamentally strong private lender with consistent earnings, digital leadership, and fair valuation. While short-term momentum is weak, long-term prospects remain attractive. Investors may consider accumulating near ₹1,300–₹1,325 for sustained exposure to India’s banking growth story.

Sources

bing.com

+5