Cash is the best insurance

India’s second largest private lender, ICICI Bank, has managed to surprise its investors with strong quarterly results and a stellar run on the bourse. In Q3FY21, net profit surged 19% to Rs.49.39 billion as against Rs.41.46 billion last year. Net interest income came in at Rs.99.12 billion, a jump of 16% year-on-year. Asset quality also improved but at the back of the Supreme Court’s order as gross non-performing asset ratio stood at 4.38% against 5.17% in September 2020.

The stock price has also bounced back from the March 2020 low of Rs.269 and registered a 52-week high of Rs.679 in February. It now trades at Rs.610. In the past six months, the stock has gained 63%.

Cashing on the stock’s upward trajectory, Bhargav Dasgupta, CEO at ICICI Lombard, offloaded stock worth Rs.278 million. Besides Dasgupta, several other insiders have also seized the opportunity. Some of the prominent sellers include Nitu Agarwal, Zonal Legal Head for North and East India; and Anupam Verma, chief executive at Singapore branch, who offloaded shares worth Rs.375 million and Rs.242 million, respectively.

As the private lender surpassed expectations in Q3FY21, analysts at Edelweiss Securities have maintained a ‘buy’ rating with target price of Rs.700. “The bank is poised to grow at higher than industry average given its (a) ample liquidity, (b) CRAR of 19.5%, (c) PCR of 86%, and (d) lower-than expected overall restructuring,” the report stated.

Analysts at Geojit BNP Paribas expect the bank’s growth in advances, prudent cost control measures and strong asset quality to be the key drivers for growth. “Robust growth in advances particularly from retail segment along with steady growth in both CASA and term deposits should aid in balance sheet expansion,” their report mentioned. They have also maintained a ‘buy’ rating with revised target price of Rs.697.

However, mutual funds have decreased their shareholding from 27.07% to 26.35% in December 2020. SBI MF and HDFC MF reduced their stake from 4.41% and 3.82% to 4.39% and 3.61%, respectively. But, FIIs increased their holding from 45.66% to 47.43% with the Government of Singapore increasing its stake from 2.46% to 2.72%.