ICICI Bank Shares rallied over 8 per cent to top the Nifty50 on Thursday. Traders attributed the strong rally in ICICI Bank to a rating upgrade by global investment bank Credit Suisse.
The brokerage upgraded ICICI Bank to "outperform" (target price of Rs 295 per share), saying recognition of bad loans and the moderation in steel sector stress (to which the lender has significant exposure) will aid ICICI Bank's re-rating.
Credit Suiise expects to see another spike in ICICI Bank's non-performing assets (NPA) during the March quarter. It also expects ICICI Bank's core return-on-equity (ROE) to be a modest 13-14 per cent in FY17-18.
However, not all analysts are bullish on ICICI Bank.
"At this price I would not prefer ICICI Bank rather I would prefer Kotak bank and Axis Bank," said G Chokkalingam of Equinomics Research & Advisory Pvt Ltd.
The business growth of ICICI Bank is not comparable to other private sector banks and in March quarter also there will be a lot of provision uptake, he told NDTV Profit.
"Things are improving as the banking credit has picked up in six fortnights in row but we should wait for the March quarter results as it is likely to see the same pain as was witnessed in the December quarter in terms of provisioning for bad loans," Mr Chokkalingam added.
The sharp rally in India's largest private sector lender lifted sentiments around banking stocks. The Bank Nifty, the sub-index of banking stocks, traded 2.5 per cent higher as compared to 0.8 per cent gain in the broader Nifty.
Shares of ICICI Bank closed at Rs 253, up 6.26 per cent outperforming broad market indicator, Sensex, which ended 0.14 per cent higher.