Morgan Stanley on Wednesday took an 'overweight' view on the ICICI stock, which in market parlance signifies that a particular stock will outperform others in its sector or in the market.
"The stock has done well over the last 18 months, but at nearly 7.5 times FY21E core PPoP, valuation is still at a deep discount to private peers - and recent policy moves should provide a significant boost to multiples," Morgan Stanley said.
"Our new one-year target price is Rs 775 (about 55 per cent upside) and in two years the stock could be worth Rs 1,000 (about 100 per cent upside). We also raise our ADR target price to $21.50," the report added.
Among the factors that analysts say are working in favour of the bank is its improving asset quality, progress in loan growth, net interest margin (NIM) and insurance premium growth are the key value drivers for ICICI Bank.
Instead, a severe slowdown in the economy, slower-than-expected loan growth recovery and major volatility on news flow around the bank's top management are the key negatives.
ICICI Bank last month had reported a 27.94 per cent decline in its standalone net profit for the second quarter of 2019-20, due to higher tax expenses. The bank's net profit in the second quarter declined to Rs 655 crore from Rs 909 crore in the year-ago quarter.
The lender's tax expense during the quarter under review rose to Rs 3,712 crore from Rs 347 crore reported for the corresponding quarter of last fiscal, on the back of one-time additional charge of Rs 2,920 crore due to re-measurement of accumulated deferred tax assets consequent to a reduction in marginal tax from 35 per cent to 25 per cent.
( With inputs from IANS )