Synopsis: Citi sees up to 43 percent upside in Axis and ICICI Bank, citing strong credit growth, healthy deposits, and improving asset quality supporting robust profitability.
The article outlines Citi’s positive outlook on Axis Bank and ICICI Bank, citing strong credit expansion, robust deposit growth, and healthy profitability as key drivers supporting near-term upside potential. It highlights the banks’ improving asset quality and operational efficiency as factors for sustained performance.
It further emphasises expected loan growth across corporate, retail, and SME segments, alongside stable net interest income and fee income. Investors are encouraged to watch for near-term triggers, as these banks’ strong fundamentals and strategic growth initiatives could drive significant gains in the coming quarters.
With the market capitalization of Rs 3,61,637 crore, Axis Bank is trading today at Rs 1,163.60, down 2.45 percent from its previous close, while ICICI Bank, with a market capitalization of Rs 8,58,783 crore, is today trading at rs 1,199.40, down 1.08 percent from its previous day’s close.
Brokerage on Banking stocks
Axis Bank
Citi maintains a BUY rating on Axis Bank with a target price of Rs 1,463, suggesting nearly 25.7 percent upside. Investors may watch for near-term triggers over the next 30 days ahead of the bank’s Q4 results.
- Growth Drivers: Axis Bank’s growth is supported by strong credit expansion across corporate, SME, and small business segments. Robust demand from these areas is boosting overall lending momentum and contributing to consistent business growth.
- Profitability & Asset Quality: The bank’s RoA is expected to be above 1.6 percent, with credit costs stable around 0.6 percent. Declining slippages reflect improving earnings efficiency and a healthy, well-managed balance sheet.
- Strong Operating Performance Axis Bank delivered robust growth with deposits and advances rising 15 percent and 14 percent year-on-year. Core operating profit increased 9 percent quarter-on-quarter and PAT surged 28 percent, supported by steady net interest income and healthy fee income, where retail and granular fees accounted for a significant 92 percent of total fees.
ICICI Bank
Citi has assigned a BUY rating to ICICI Bank with a target price of Rs 1,720, indicating an upside of approximately 43.4 percent. Investors may monitor the stock closely over the next 90 days for potential positive catalysts driving near-term gains.
- Loan Growth: ICICI Bank is expected to report robust loan growth of around 5 percent quarter-on-quarter across key segments. Strong demand across corporate, retail, and SME lending is supporting the bank’s credit expansion and reinforcing its position in the lending market.
- Deposit Momentum & Profitability: Deposits are projected to grow over 6 percent quarter-on-quarter, driven by expansion in the retail franchise. Profitability remains healthy, with RoA expected above 2.3 percent, reflecting strong margins, operational efficiency, and effective balance sheet management.
- Robust Core Operations & Loan Growth: The bank posted a core operating profit of Rs 17,513 crore, up 6 percent YoY, with PAT at Rs 11,318 crore. Average deposits grew 8.7 percent YoY, supported by CASA, while domestic loans rose 11.5 percent YoY, driven by retail and business banking portfolios.
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