Here's Why ICICI Bank (IBN) Stock is Worth Buying Right Now
ICICI Bank Ltd IBN is well-poised to benefit from its efforts to digitize banking services and dependence on domestic loans. Hence, the stock seems like a good investment option right now.
The Zacks Consensus Estimate for ICICI Bank's fiscal 2024 earnings has been revised 1.5% north over the past 30 days. This shows that analysts are optimistic regarding the company’s earnings prospects. IBN currently carries a Zacks Rank #2 (Buy).
Over the past year, shares of the company have gained 12% compared with the industry's rally of 17.3%.
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Here are a few factors that make IBN stock a rewarding investment pick now:
Earnings Growth: In the last three to five years, IBN witnessed earnings growth of 58.4%, significantly higher than the industry’s average of 7.9%. The uptrend is expected to continue in the near term, with the company’s earnings projected to rise 18.8% and 8.7% in fiscal 2024 and fiscal 2025, respectively.
Digitization Efforts: ICICI Bank has been making significant progress in improving digital banking services for both its retail and corporate clients. The increasing adoption of the bank’s mobile banking app — iMobile Pay — is helping garner solid market share, with nearly 10 million activations of iMobile Pay from non-ICICI Bank users as of Sep 30, 2023.
Also, IBN's digital platform for businesses, InstaBIZ, along with supply chain platforms, has witnessed significant growth in the past few quarters. These efforts are leading to a rapid increase in end-to-end digital sanctions and disbursements across various products. Notably, as of Sep 30, 2023, the company saw about 2.8 million registrations by non-ICICI Bank account holders on InstaBIZ. Capitalizing on these, the company remains well-positioned for growth.
Improving Fee Income: ICICI Bank has been successfully leveraging its technological initiatives to augment the contribution of fee income toward its top line. Driven by these efforts, non-interest income continues to improve. ICICI Bank's non-interest income, which is a key component of its revenues, increased 13% in the first half of fiscal 2024, following a 13% rise in fiscal 2023 and 27% growth in fiscal 2022. The company's efforts to digitize operations and a rise in mobile banking transactions are likely to continue to help garner more fee income going forward.
High Domestic Loan Dependence: ICICI Bank is likely to benefit from its high dependence on domestic loans, which form a substantial part of its overall loans. As of Sep 30, 2023, ICICI Bank's domestic loans represented 96.7% of the bank's overall loans. Moreover, during the first half of fiscal 2024, retail loans witnessed a 21.4% rise and in fiscal 2023, retail loans grew 23%. This secures the company with respect to loans and makes it less susceptible to global concerns.
Strong Leverage: ICICI Bank has a debt/equity ratio of 0.79 compared with the industry average of 0.84, indicating that it has a lower debt burden relative to the industry. This highlights the financial stability of the company and is likely to enable it to navigate through periods of economic downturns.
Superior Return on Equity (ROE): IBN has a trailing 12-month ROE of 16.36%, which compares favorably with 11.82% of the industry. This reflects that it is more efficient in using shareholder funds than its peers.
Other Foreign Banks Worth a Look
A couple of other top-ranked foreign banks are Bancolombia S.A. CIB and Mitsubishi UFJ Financial Group, Inc. MUFG.
Bancolombia’s earnings estimates for 2023 have moved almost 1% upward over the past 30 days. The stock has rallied 12% over the past year. CIB currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Mitsubishi UFJ’s current-year earnings estimates have moved 2.6% north over the past month. The company’s shares have gained 24.3% over the past year. At present, MUFG carries a Zacks Rank of 2.
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ICICI Bank Limited (IBN) : Free Stock Analysis Report
BanColombia S.A. (CIB) : Free Stock Analysis Report
Mitsubishi UFJ Financial Group, Inc. (MUFG) : Free Stock Analysis Report
