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ICICI Bank Ltd – Jo Jeeta Wahi Sikandar

Updated: Jul 26, 2022

Company Name – ICICI Bank Limited (ICICI Bank)

Current Share Price – INR 800 (July 22, 2022)

Market Cap – INR 5,56,562 cr


[Updated for Q4FY22/FY22 results]

1. What is interesting about the stock?

Final Race Between Sanjay & Shekhar in Jo Jeeta Wahi Sikandar

If you have watched the cult movie Jo Jeeta Wahi Sikandar and have been following the Indian Banking industry in the past few years, you can’t help but notice a few parallels here between the showdown of the top 2 in the Indian banking industry and the movie’s final race.

Although we can say that there isn’t any end to the race in the banking industry or any other industry in general, it is safe to say that the top 2 contenders have pulled way ahead of the rest of the industry. Shekhar (HDFC Bank) is still firmly in the lead, but Sanjay (ICICI Bank) is slowly inching closer in a bid to overtake the leader. Will Sanjay come to level with Shekhar is uncertain, but, surely, the race is now becoming closer than ever before.

The Banking industry in India, especially the private sector has grown mainly on the back of the trust, service quality, and operational efficiency demonstrated by these private players over the dominant public sector banks.

But now the same factors as operational efficiency, good underwriting, and trust have become the norm (hygiene factor) in the banking sector and are no longer the differentiating factor. The new edge that will dictate the race now is technology, ease of usage, and superior app & platform experience.

And technology is what ICICI Bank is counting on to be able to match and overtake the market leader HDFC Bank. ICICI Bank has been a pioneer in the Indian Banking Industry for a long time. It has not only been involved in the creation of many historic institutions like NSE, CRISIL, and CIBIL, but it has also been the trailblazer in the technology services introduced in the banking industry.

ICICI Bank was the first in India to introduce a mobile banking app way back in 2008 and has even adapted its mobile app iMobile Pay to become India’s 1st universal banking app that provides payment and banking solutions to customers of any bank present in India.

ICICI Bank is a behemoth with a network of ~5,500 branches as of June 30, 2022. The branch distribution is very even with 50% branches in metro+urban areas while the remaining 50% is in semi-urban+rural regions.

It is a retail-focused bank with 63% of the loan portfolio from the retail segment. The business banking, SME segments, and overseas book account for only 6%, 4%, and 5% respectively of the loan portfolio. The remaining 22% is in the corporate segment.

But this is not all there is to ICICI Bank. The bank is also the parent entity for all the other parts of the ICICI group which include:

  • ICICI Prudential Life Insurance

  • ICICI Lombard General Insurance

  • ICICI Prudential Asset Management

  • ICICI Securities

  • ICICI Ventures

  • ICICI Home Finance

This ensures that when you are investing in ICICI Bank, you are also indirectly putting money into the entire ICICI Group which is one of the leading BFSI groups with a market share near the top in almost every financial segment in the country.

Industry Overview

The Banking sector looks to have a long growth runway driven by several industry drivers such as:

  • Rising income and young demographic profile

  • Rapid growth in the Fintech space is expected to grow to USD 83 trillion by 2025 according to IBEF.

  • Rising mobile internet and online payment usage.

  • Digital lending space is expected to more than double FY20 levels in FY23.

  • Rising credit in the housing finance space.

  • Govt initiatives like

    • Pradhan Mantri Suraksha Bima Yojana

    • Pradhan Mantri Jeevan Jyoti Bima Yojana

    • Pradhan Mantri Jan Dhan Yojana

    • Pradhan Mantri Awas Yojana

  • Growing penetration in all financial segments like Insurance, investments, SME lending, etc.

The major competitors of ICICI Bank in India are:

  • HDFC Bank

  • State Bank of India

  • Kotak Mahindra Bank

  • Axis Bank


The biggest edge for ICICI Bank is its focus and expertise in banking technology. Their iMobile Pay app has seen over 5.3 million activations from non-ICICI customers which stands as a testament to their innovative capabilities in the retail banking and technology space.

Source: Q1FY23 Investor PPT

It is also concentrating on using technology to capture the nascent areas of banking in India like SME and corporate lending using its proprietary banking apps like InstaBiz where it already has over 1 million SME customers and its merchant platforms.

Source: Q1FY23 Investor PPT

Source: ICICI Bank Investor Day PPT

The 2nd big edge of the bank is the established brand image of all of the Group entities and its vast physical network which not only facilitates the expansion of its banking services, but also cross-sells other offerings under the group like insurance, and mutual funds, and others. This is a strength that is seen only in SBI and HDFC Bank at a scale comparable to ICICI Bank.

2. Key Historical Financials

In terms of historic performance, ICICI Bank has maintained a steady 10% revenue CAGR in the past 10 years, while growing PAT at a 13% CAGR in the same period. In the past 3 years, however, the sales CAGR was 10% while the PAT CAGR has gone up to 81%.

ICICI Bank's revenue grew 16% in Q1FY23 on a YoY basis but the profit grew 58% due to lower provisions. Net Interest Margin expanded 1 basis point in Q1FY23 vs Q4FY22. CASA ratio was ~47%.

3. What is my view on company valuation?

ICICI Bank has risen ~200% in the last 5 years vs the Nifty Bank index which has risen only ~90% in comparison & to the Nifty Private Bank Index which has shown only a ~70% rise in the same period. This shows that the bank has significantly outperformed the banking industry benchmarks.

The bank currently trades at a P/E of 20x vs 19x of HDFC Bank, 13x of SBI, 28x of Kotak Mahindra Bank, and 16x of Axis Bank.

In terms of Price to Book value, ICICI Bank is trading at close to 3.5x vs. 3.1x of HDFC Bank, 1.5x of SBI, 4.3x of Kotak Mahindra Bank, and 1.9x of Axis Bank.

The Bank has gone through numerous changes since the appointment of the current CEO Sandeep Bakshi after the high-profile sacking of Chanda Kocchar. Sandeep Bakshi has cleaned up the bank’s balance sheet and has seen profit growth outpace revenue growth with CAGRs of 81% and 10% respectively over the last 3 years. This has also seen the RoE rise to 15% currently which is higher than Kotak Mahindra Bank’s current RoE (13%) and has significantly reduced the gap with HDFC Bank to 3% from the 8-9% seen earlier.

Based on the improving numbers of the past 3 years and the promise shown by the accelerating digital operations of the Bank, I expect ICICI Bank to maintain a 15% revenue CAGR for the next two years and PAT should stabilize to near 20% CAGR as the bank inches closer to HDFC Bank in terms RoE and the provision number (quality of book) stabilizes.

ICICI Bank looks interesting in the medium to long term and should be evaluated by investors.

4. What are the risks to the investment analysis?

Risks to the analysis are:

  • The Company has faced a lot of controversies over the years like alleged money laundering, debt recovery, and others which have hurt its brand image. Any such event in the future will compromise on the trust built up by the bank and push it back down the pecking order in the industry.

  • GNPA was still high for the bank at 3.6% vs only 1.2% for rival HDFC Bank highlighting a sizeable difference between their underwriting standards. Net NPA for ICICI Bank was at 0.8% vs HDFC Bank’s 0.3% as of March 2022.

  • The competition in the financial services space is very high with all kinds of competitors from other banks like HDFC Bank, NBFCs like Bajaj Finance, and even new age competitors like Navi Technologies and Paytm all targeting the Indian Financial Services Market. The bank will have to maintain technological momentum or else it will be easily left behind in this ever-intensifying race.

  • With the increase in usage of internet banking, the physical branches could become a drag in long term - this kind of shift has started happening in the developed markets


About the Author

I have over 6 years of experience in the Investment sector and have been an active prop trader in European Bond Futures in the past. Currently, I am working as head of Research at Smart Sync Services where we are working on simplifying and expanding financial and investment knowledge to make the investment world as accessible for everyday investors as much as possible.

I graduated from the Master of Finance Program at Cambridge University in 2016 after completing my Bachelor of Engineering program at Jadavpur University, Kolkata in 2011.

I am an insignificant public investor & have an avid interest in following emerging trends both in technology and other fast-evolving sectors. I am also a lifelong learner and relish the chance to learn something new all the time.


I have no stock, option, or similar derivative position in any of the companies mentioned in the last 30 days, and shall not initiate any such positions within the next 5 days. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from SocInvest). I have no business relationship with any company whose stock is mentioned in this article.

I am not a SEBI registered advisor. This article is purely for educational purposes and not to be construed as investment advice. Please consult your financial advisor before acting on it.

I have used publicly available information while writing this article.


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