ICICI Bank is MOFSL’s top banking pick with 39% upside potential; here’s why

ICICI Bank Ltd is well-positioned to sustain its growth momentum while maintaining profitability benchmarks, Motilal Oswal Financial Services Ltd (MOFSL) said in a recent note, naming the private lender its top ‘Buy’ pick from the banking sector.

“We expect the bank to deliver a 16 per cent loan CAGR over FY26-FY28, led by strong growth in Business Banking and PL, while the corporate segment is also expected to witness healthy traction, supported by working capital demand,” the brokerage added.

“The liability franchise continues to remain best-in-class, supported by diversified acquisition engines and a rapidly expanding physical network. With a domestic CD ratio of 85.5 per cent and LCR of ~126 per cent, the bank is well placed to capitalise on growth opportunities compared to peers,” MOFSL also said.

ICICI Bank is likely to maintain cost leadership despite meaningful investments in technology, customer delivery, analytics, and talent.

“We estimate the C/I ratio to range ~39 per cent/38 per cent over FY27/28, respectively. ICICI’s asset quality remains robust, supported by disciplined underwriting, continued monitoring, and strong recoveries, while the bank maintains a healthy contingency buffer (0.9 per cent of loans),” the brokerage noted.

“The bank currently does not face additional portfolio stress from the West Asia crisis or ECL transition. Credit costs are, thus, expected to remain contained, with GNPA/NNPA improving to ~1.4 per cent/0.3 per cent by FY28E,” it also stated.

MOFSL highlighted that the stock has delivered tepid performance over the past year, reflecting broader derating across large banking stocks amid persistent FII selling. “However, with operating performance holding strong and sustained market share gains across key lending segments, we expect a gradual rerating,” it said.

“We build in FY28E RoA/RoE of 2.3 per cent/16.2 per cent. ICICI Bank remains our top BUY within the banking sector, with a TP of Rs 1,750 (2.5x Sep’27E standalone ABV),” MOFSL further stated.

Meanwhile, shares of ICICI Bank were last seen trading 0.46 per cent higher at Rs 1,258 in Friday’s trade, implying a 39.11 per cent upside potential from the brokerage’s suggested target price of Rs 1,750.