The ICICI Bank stock rose to a six-month high intra day today after the lender responded to a media report which said the lender masked its bad loans via change in accounting policy. The allegations come at a time when long-serving chief executive officer of the country's third-biggest lender by assets Chanda Kochhar is on leave pending the completion of an independent probe into sanctioning of Rs 3,250-crore loan to the Videocon Group.
The bank said it had made full disclosure in its annual report, investor presentations and analysts calls.
The lender said, "The media report is a mischievous and motivated attempt to malign the image of ICICI Bank in the eyes of its investors. The bank's accounts are audited by reputed Statutory Auditors whose audit report and audit opinion form part of the Bank's annual report."
Separately, sentiment turned bullish after Morgan Stanley raised the price target to Rs 460 from Rs 425 and assigned 'overweight' rating to the stock.
The brokerage said stock offers the best risk-reward and fundamental trends have moved in line with expectations, with aggressive recognition and provisioning.
Net bad loan formation has slowed and should remain low.
The stock could double in the next two years as it moves from impaired to normalised to growth.
Credit Suisse said as credit costs normalise, it expects return on equities to recover to 13% in FY20E. Management believes corporate asset quality cycle is largely behind and most of the provisioning cycle should be completed in FY19. It maintained the target price of Rs 357 on stock.
The stock rose 8.5% intra day to Rs 345.85, its highest level since February 2018. It was the top Sensex, Nifty gainer today. It has gained 14.89% during the last one year and 6.42% since the beginning of this year.
The large cap stock has been rising for two days and has gained 6.72% during the period.
41 of 44 brokerages rate the stock "buy" or 'outperform', two "hold" and one "underperform", according to Reuters.
ICICI Bank reported a loss of Rs 119.5 crore on standalone basis for the June quarter, on account of a rise in bad loans.
The bank's net profit in the year-ago period stood at Rs 2,049 crore. Total income was Rs 18,574.17 crore as against Rs 16,847.04 crore in April-June, 2017-18, the bank said.
Net profit on consolidated basis for the June quarter was a meagre Rs 4.93 crore, compared to Rs 2,604.73 crore a year ago. There was a deterioration in bank's asset quality, with gross non-performing assets (NPAs) or bad loans widening to 8.81 per cent of the gross advances as on June 30, 2018, compared to 7.99 per cent by June last year.
There was a significant jump in provisioning and contingencies at Rs 5,971.29 crore for the reported quarter as against Rs 2,608.74 crore earlier.