ICICI Bank shares can re-rate further, says Morgan Stanley

Brokerage firm Morgan Stanley expects shares of ICICI Bank Ltd, one of India's largest private lenders, to re-rate further, following its recent outperformance.

ICICI Bank remains Morgan Stanley’s top stock pick in this sector.

ICICI Bank shares have surged by 27% in 2024, surpassing the Nifty Bank index, which has gained 7.5% this year despite a pullback from its peak.

In its latest report, Morgan Stanley reaffirmed its "overweight" rating for ICICI Bank, raising the target price from ₹1,465 to ₹1,650 — the highest target on the Street.

The brokerage believes ICICI Bank’s shares will continue to rise, underpinned by the power of compounding. Its recent success has been fuelled by improvements in funding and underwriting capabilities, with Morgan Stanley also projecting that ICICI’s earnings will outperform peers aided by better delivery systems.

For the September quarter, ICICI Bank's asset quality was the best in over a decade, while operating efficiency was the best in the last seven quarters.

ICICI Bank's quarterly net profit from its subsidiaries was also at an all-time high during the quarter.

Out of the 50 analysts that have coverage on ICICI Bank, 45 of them have a "buy" rating on the stock, while the other five have a "hold" recommendation. No analyst has a "sell" recommendation on ICICI Bank.

Shares of ICICI Bank ended 0.8% higher on Monday at ₹1,268.6. The stock is 7% adrift of its recent record high of ₹1,362.