Axis Bank Ltd. share price target

Though we continue to admire core operating performance and business franchise of Axis Bank, the current headwinds clearly indicate more pressure on profitability in the near-term. We believe that the Bank will continue to witness higher credit cost, which will keep its earning profile and return ratio subdued over next 4-6 quarters. Rolling over our estimates to FY19E, we reiterate our HOLD recommendation on the stock with an upwardly revised Target Price of...

ICICI Securities Ltd | Retail Equity Research Headline asset quality numbers like GNPA ratio jumped to 5.22% (| 20467 crore) from 4.17% in Q2FY17. Outstanding restructured book was at | 6109 crore (1.6% of total advances). Slippages were higher at | 4560 crore, led by ~| 2579 crore that slipped from watchlist while ~| 1631 crore were fresh slippages. The bank's watchlist fell 19.5% over the previous quarter and was at | 11091 crore. Total SDR & 5-25 were at | 1360 crore & | 2992 crore, respectively...

Given the stress we have been expecting, the profit miss came hardly as a surprise. Nevertheless, a few points have to be noted: a) there was an interest income reversal on a SDR account to the extent of Rs3.16bn, so adjusted for this AXSB would have reported NII in-line with our estimate. The reversal was a one-time occurrence and therefore NII could normalise' in Q4FY17E, b) the massive other income jump was driven by a jump in trading profits to Rs15.3bn, hence, this too should normalize in Q4FY17E, c) lower slippages (Rs45.6bn) did not stop AXSB management from provisioning higher, thereby converting a better than estimated...

NII fell to Rs. 4333.73 Cr in Q3FY17 compared to Rs. 4513.87 Cr in Q2FY17.

AXSB continued its weak performance in 3Q as well. While slippages were elevated at 5.2% ann., the sharp 4x sequential rise in ex-watchlist slippages was disappointing. Business momentum also stumbled with a ~2% sequential decline in loans (led by SME and corp) and deposits (FCNR redemptions of $1.62bn). NIM fell ~20bps QoQ with one off interest reversals on SDR and S4A exposures.

Asset quality deteriorated with GNPAs increased sharply to 5.22% of advances (105bps QoQ) while NNPA increased to 1.43% of advances (16bps QoQ) driven by slippages of INR 25.8bn from the watch list which constitutes 70% of the total corporate credit slippage. Up-gradations and recoveries were noted at INR 3.5bn and write-offs at INR 1.22bn. The Bank's net restructured book stands at INR 61bn. During 3QFY17, the bank implemented SDR on two...

On account of sharp 432.7% yoy (4.8% qoq) surge in provisioning expenses, Axis Bank continued to report below par performance in 3QFY17 as well. Upsurge in provisioning expenses led to earnings de-growth of 73.4% yoy. Higher provisioning was primarily attributable to Management's decision to increase provision coverage ratio to 64% in 3QFY17 compared to 60% in 2QFY17 along with elevated fresh slippages of Rs45.6bn (48% qoq from Rs87.7bn in 2QFY17) compared to Rs20.8bn in 3QFY16. Total slippages from Watch List Accounts to NPAs stood at 55.5% and the Bank had revised it guidance of slippages from Watch List from earlier 60% to significantly higher level for FY17E & FY18E. Hence,...

ICICI Securities Ltd | Retail Equity Research The GNPA ratio jumped to 4.17% (| 16379 crore) from 2.54% QoQ. The outstanding RA book was at | 6702 crore or 1.9% of total loans. Fresh slippages were higher at | 8772 crore vs. | 5325 crore in full year FY16. Corporate loans were 93% of fresh slippages at | 8189 crore of which 89% i.e. | 7288 crore was from the watch list. The...