equity serviceMotilal Oswal expects the bank to deliver 1.1 percent RoA/11 percent RoE by FY20, which should expand further thereafter. It is one of the top picks in the banking sector.

Macquarie and UBS maintained their outperform and buy rating, respectively, on ICICI Bank after the bank board approved MD and CEO Chanda Kochhar’s early retirement.

Kochhar had led ICICI Bank since 2009 and her third term was due to end in March 2019. Sandeep Bakhshi, who was appointed the bank’s COO in June, will succeed Kochhar, ICICI Bank said in a release.

Most experts feel that resignation of Chanda Kochhar removed the uncertainty from the stock and is largely positive for the bank and the business.

UBS maintained a buy rating on ICICI Bank but raised its target price to Rs 440 from Rs 410 earlier which means an upside of nearly 40 percent from Thursday’s closing price of Rs 316.50.

Kochhar’s exit is positive for the bank as stakeholders will focus on core banking business. The loan book clean-up should contribute to improvement in earnings. The core banking business and retail franchise are some of the key factors to the buy thesis.

Macquarie maintained its outperform rating on ICICI Bank with a target of Rs 416 which translates into an upside of 31 percent from Thursday’s closing price.

Chanda Kochhar’s resignation removes a major overhang around the stock. The global investment bank does not expect any major challenges by RBI on Sandeep Bakhshi’s appointment as CEO. The RoE is likely to improve due to falling credit costs, said the brokerage note.

Motilal Oswal also maintained buy rating with a target price of Rs 380 which is an upside potential of 20 percent from current levels.

The domestic brokerage firm believes that ICICI Bank board’s move to accept Kochhar’s request for early retirement will likely help improve market perception of transparency and governance at ICICI Bank.

“While Sandeep Bakhshi presented last quarterly results at ICICI, the upcoming result announcement now becomes much more important as it will provide much-needed clarity on the bank’s performance and the revised business strategy under the new leadership,” it said.

Motilal Oswal expects the bank to deliver 1.1 percent RoA/11 percent RoE by FY20, which should expand further thereafter. It is one of the top picks in the banking sector.

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