The country's third largest bank surged to its six-month high in morning trade after clarifying to the stock exchanges that it had made full disclosures of its bad loans and accounting policies. The share price of ICICI Bank advanced as much as 8.5 percent to reach a high of Rs 345.85 a piece.

Meanwhile, as per a note from investment bank Morgan Stanley, the bank stock can be expected to double in the next two years. It sees a favourable risk-reward as it trades at 1.2 times estimated price-to-book value for the financial year 2019-20. It emphasized that foreign ownership in the bank was at 60 percent, the lowest in 15 years.

"If we are correct on our assessment of that, investors could start to value this stock as a growth stock. The upside to valuations can be fairly material. Right now, it sounds aggressive to build in a possibility of ICICI Bank trading at average retail lender's multiples. But in our view, if asset quality concerns abate, core PPoP growth picks up and RoE (return on equity) improvement comes through, this will likely happen," the report said.

It further said,"as we move into FY20, we expect sharply lower credit costs and core PPoP growth at over 20 percent. We expect RoE of 14-15 percent in FY20-21. This could imply a substantial re-rating over a relatively short period - FY20e core PPoP is now just 5x."

It means that when a bank's non-performing loan problems are resolved, the strong re-rating usually fades as PPoP suffers from subsequent risk aversion. This, however, may not happen to ICICI as they continue to improve their retail franchise, which is driving its underlying earnings progression.