RoA at 2.32% for FY26, asset quality at multi-year best, advances growing 16% — MOFSL calls ICICI Bank its top BUY in the sector
If you had to pick one bank stock to hold through a cycle, ICICI Bank would be a strong candidate — and its latest quarterly results only reinforce why. The bank reported 4QFY26 PAT of Rs 137 billion, a 4% beat on estimates, driven by strong core performance and near-zero provisions. Motilal Oswal Financial Services has maintained its BUY rating with a target price of Rs 1,750 — implying 30% upside from current levels — calling it their top pick in the sector.
A Good Quarter
The headline numbers were clean across the board. Net interest income grew 8.4% year-on-year to Rs 229.8 billion. NIMs improved 2 basis points sequentially to 4.32%. The cost-to-income ratio declined to 40% from 40.8% the previous quarter. And provisions were almost non-existent at just Rs 1 billion — aided by recoveries and write-backs, primarily in the corporate book. “4Q PAT grew 8.5% YoY and 21.1% QoQ,” the MOFSL report notes, with consolidated PAT rising 9.3% year-on-year to Rs 147.6 billion.
The Loan Book Is Growing Right
Advances grew at a robust 15.8% year-on-year and 6% sequentially — faster than most peers. The standout within the book was business banking, up 24.4% year-on-year. The retail portfolio grew 11% year-on-year. Even the domestic corporate book, which has historically been the drag at Indian banks, grew 9.3% year-on-year. Mortgage disbursements — which had been sluggish — are now recovering. This is a broad-based loan growth story, not a one-segment wonder.
Asset Quality Is Good
Gross NPA ratio fell 13 basis points sequentially to 1.4%. Net NPA declined to 0.33%. The provision coverage ratio improved to 77.6%. The bank also maintains a contingency buffer of Rs 131 billion — 0.9% of loans — as dry powder against any future stress. “Asset quality is among the best in the industry,” MOFSL notes. For a bank of ICICI’s size, these are exceptional numbers.
FY26 RoA came in at 2.32% — best-in-class among large Indian banks. MOFSL expects the bank to sustain an average RoA of 2.25% over FY27-28, supported by steady business growth, resilient margins and controlled credit costs in the 0.4-0.5% range. By FY28, the brokerage projects RoA/RoE of 2.3%/16.2%. These are not aspirational numbers — they are rooted in a franchise that has already demonstrated it can deliver.
What Is It Worth
| Metric | Value |
|---|---|
| Current Market Price | Rs 1,346 (approx.) |
| Target Price | Rs 1,750 |
| Upside | 30% |
| Rating | BUY (Top Pick) |
| Valuation | 2.5x Sep’27E ABV |
| FY26 RoA | 2.32% |
| FY28E RoA/RoE | 2.3% / 16.2% |
The valuation at 2.5x Sep’27 adjusted book is not cheap in absolute terms — but for a bank consistently delivering above-2% RoA with pristine asset quality and accelerating loan growth, it is arguably fair. The stock has been range-bound over the past year amid broad FII selling in banking. MOFSL sees that as the setup, not the problem: “With operating performance holding strong and growth gaining traction, we expect the bank to rerate gradually.”
The Final Word
ICICI Bank stock is not a speculative bet. It is a compounding machine — one of the few Indian banks with the balance sheet quality, management execution and growth runway to sustain 15%+ RoE through cycles. The boring quarter-after-quarter consistency is the point. At 30% upside to target and with FY26 now confirmed as its best-ever RoA year, the risk-reward remains compelling.