Kotak Expert's Shocking BUY Calls: ICICI Bank & Gravita India - Are These Your Next Big Wins?

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AuthorAbhay Singh|Published at:
Kotak Expert's Shocking BUY Calls: ICICI Bank & Gravita India - Are These Your Next Big Wins?
Overview

Shrikant Chouhan, Head Equity Research at Kotak Securities, recommends a BUY for ICICI Bank and Gravita India. ICICI Bank is praised for its robust financials, pristine asset quality, and strong market position. Gravita India is highlighted for its strong Q2FY26 performance, capacity expansion plans, and solid growth outlook in lead recycling and Li-ion battery recycling. Both stocks are seen as attractive investment opportunities with significant upside potential.

Kotak Securities Analyst Recommends Buying ICICI Bank and Gravita India

Shrikant Chouhan, Head of Equity Research at Kotak Securities, has issued 'BUY' recommendations for two prominent Indian stocks: ICICI Bank and Gravita India. His analysis highlights strong financial performance, promising growth prospects, and attractive valuations for both companies.

Expert Recommendations

  • Shrikant Chouhan of Kotak Securities has identified ICICI Bank and Gravita India as strong investment opportunities.
  • Both stocks have been assigned a 'BUY' rating with specific target prices and support/resistance levels provided.

ICICI Bank Analysis

  • ICICI Bank, India's second-largest private sector bank, boasts a strong pan-India franchise and international presence.
  • As of Q2FY26, total advances stood at ₹14.1 trillion, with domestic loans growing 10.6% year-on-year. Retail loans comprise 52% of the portfolio, supported by secured products like mortgages.
  • Unsecured exposure, including credit cards and personal loans, is prudently managed at 13% of total loans, limiting downside risk.
  • Profitability metrics are best-in-class: Net Interest Margin (NIM) was resilient at 4.3%, Return on Asset (RoA) at 2.3%, and Return on Equity (RoE) at 16-17%.
  • Fee income grew 10% YoY, and core operating profit rose 6.5% YoY, demonstrating steady operating momentum.
  • Cost efficiency remains a strength, with a cost-to-income ratio near 39-40%.
  • Asset quality is described as pristine, with Gross Non-Performing Asset (NPA) improving to 1.6% and Net NPA to 0.4%. The Provision Coverage Ratio (PCR) stands at 75%.
  • Credit costs remained benign at 30-40 basis points, and slippages moderated sequentially.
  • The bank maintains a significant contingency buffer of ₹1,310 crore (90 bps of advances), providing a cushion against unforeseen stress.

Gravita India Analysis

  • Gravita India reported a strong Q2FY26 performance, with Profit After Tax (PAT) rising 33% year-on-year, exceeding expectations.
  • Improved operating margins, reaching 10.7%, contributed to the robust profit growth.
  • Volume growth in H1FY26 (8% YoY) was temporarily impacted by capacity expansion delays and GST-related destocking.
  • However, with 125 kilotons per annum (ktpa) of lead recycling capacity set to be commissioned in H2FY26, volumes are poised for acceleration.
  • The company is on track to support a projected 33% YoY volume growth outlook for FY2027E.
  • Capacity additions at Mundra and Phagi in H2FY26 will significantly enhance its lead footprint.
  • Gravita India has prudently rephased capital expenditure (capex), prioritizing brownfield expansion.
  • The roadmap towards 0.7 million tons per annum (mtpa) of recycling capacity by FY2028 remains intact.
  • A Li-ion battery recycling pilot plant at Mundra is scheduled to commence operations in Q3FY26.
  • The company is expected to deliver a 25% revenue and 24% Earnings Per Share (EPS) Compound Annual Growth Rate (CAGR) over FY2025-28E.
  • Valuations are considered attractive following a recent correction, offering a good risk-reward profile.

Market Outlook and Sectoral Tailwinds

  • The banking sector is anticipated to see a stronger H2FY26 compared to H1, with loan growth expected to gradually pick up.
  • System liquidity improvements and reviving demand are key drivers for the expected loan growth uptick.
  • Margins for banks likely bottomed in Q2FY26, with limited downside expected from anticipated rate cuts.
  • The worst of stress in unsecured and microfinance institution (MFI) segments appears to be behind us, supporting asset quality normalization.
  • As a large, well-diversified lender, ICICI Bank is ideally positioned to capitalize on these positive sectoral trends.

Impact

  • These recommendations could significantly influence investor sentiment towards ICICI Bank and Gravita India, potentially driving increased buying activity and stock price appreciation.
  • The detailed analysis provides valuable insights for investors seeking opportunities in the banking and environmental recycling sectors, guiding their investment decisions.
  • Impact Rating: 8/10

Difficult Terms Explained

  • CMP: Current Market Price - The current price at which a stock is trading on the exchange.
  • FV: Future Value/Target Price - The price level an analyst or investor expects a stock to reach in the future.
  • NIM: Net Interest Margin - A profitability ratio that measures how effectively a bank is managing its interest-earning assets and interest-bearing liabilities. It's the difference between interest income and interest expense, divided by average earning assets.
  • RoA: Return on Asset - A profitability ratio that indicates how profitable a company is relative to its total assets. It measures how efficiently a company uses its assets to generate earnings.
  • RoE: Return on Equity - A profitability ratio that measures how much profit a company generates with the money shareholders have invested.
  • NPA: Non-Performing Asset - A loan or advance for which the principal or interest payment remained overdue for a specified period (usually 90 days).
  • PCR: Provision Coverage Ratio - The ratio of a bank's total provisions for non-performing assets to its gross non-performing assets. It indicates the extent to which a bank has covered its NPAs with provisions.
  • bps: basis points - A unit of measure used in finance to describe small percentage changes. 1 basis point is equal to 0.01% (1/100th of a percent).
  • ktpa: kilotons per annum - A unit of measurement for volume, typically used in industrial contexts, representing thousands of metric tons per year.
  • GST: Goods and Services Tax - An indirect tax levied on the supply of goods and services in India.
  • RCM: Reverse Charge Mechanism - A tax provision where the recipient of goods or services is liable to pay the tax, instead of the supplier.
  • MCX: Multi Commodity Exchange - A commodity derivatives exchange based in India, offering trading in various commodities.
  • PAT: Profit After Tax - The net profit of a company after all taxes have been deducted.
  • EPS: Earnings Per Share - A financial metric that indicates the portion of a company's profit allocated to each outstanding share of common stock.
  • CAGR: Compound Annual Growth Rate - The average annual rate of growth of an investment over a specified period longer than one year.
  • FY26/FY27E: Fiscal Year 2026 / Fiscal Year 2027 Estimates - Refers to financial projections for the fiscal year ending March 31, 2026, or 2027.
Disclaimer:This content is for educational and informational purposes only and does not constitute investment, financial, or trading advice, nor a recommendation to buy or sell any securities. Readers should consult a SEBI-registered advisor before making investment decisions, as markets involve risk and past performance does not guarantee future results. The publisher and authors accept no liability for any losses. Some content may be AI-generated and may contain errors; accuracy and completeness are not guaranteed. Views expressed do not reflect the publication’s editorial stance.