Axis Bank Ltd. share price target

Axis Bank's net interest income (NII) grew at a healthy pace of 15% YoY (in line with our expectation) mainly due to 11 bps YoY increase in net interest margin (NIM) to 3.5%. With better pricing power and lower interest income reversals, we expect NIM to improve further by 10-15 bps to 3.6% over FY18-FY20E. Other income grew by 4% YoY as the bank reported lower trading income (64% YoY). Fee income growth was modest at 9% YoY wherein retail fee grew at a strong pace of 23% YoY, but corporate fee declined by 37% YoY. Though provisions declined by 7% YoY, we expect it to remain elevated in H2FY19 as the bank continues to provide further for its stressed pool in FY19. Net profit jumped by 83% YoY mainly on the back of the low base of Q2FY18. Going...

Relative valuation premium amidst transition & higher non-corporate slippages: The quarter is marked by much lower slippages in the corporate segment; however we sense Retail/SME slippages continuing to remain high.

Axis Bank registered an 18% rise in Interest income to Rs 13280.99 crore in the quarter ended September 2018. A 20% rise in interest expenses to Rs 8048.88 crore saw net interest income (NII) rise 15% to Rs 5232.11 crore....

Significant improvement is seen on asset quality. Slippages have eased to 2.4% as against 3.9% last quarter. Similarly GNPA as well as provision coverage has improved sequentially. Loan growth is moderate at 11%, driven by retail and SME segment. NII growth of 15% is in line with our expectations; whereas PAT growth of 83% is 4% ahead of our estimates. We have cut our slippage estimate by 100bps to 3% for FY19. We have raised our ABV estimates by 3%/1% for FY19/FY20. Given the recent price correction, we upgrade our rating to ACCUMULATE marginally increasing our TP to Rs665 (Rs655...

Axis Bank reported a stellar set of numbers Asset quality improved further in Q2FY19. Slippages came in at | 2777 crore (lowest in last several quarters) vs. | 4337 crore in Q1FY19. Corporate slippages were at | 1090 crore. Total 88% of this came from disclosed BB & below accounts. The bank's BB & below rated book was at | 8860 crore. This is 1.7% of the bank's gross customer assets vs. 7.3% peak reached in June 2016 Exposure to IL&FS; is relatively lower at | 825 crore. Of this | 238 is...

Maintain BUY with a TP of Rs 718 (2.5x Sept-20E ABV of Rs 287). AXSBs 2Q performance was characterized by continued amelioration in asset quality, improving growth and visible focus on the granular business in line with our expectations. We expect this trend to strengthen as Amitabh Choudhary takes charge.

We retain HOLD on Axis Bank with TP revised upwards to Rs560 (valued at 2x FY20E ABV) . Q2'19 results were in-line with our estimates on revenue / operating front. Slippages came in lower (2.4% of loans); provision coverage therein has improved further. The share of vulnerable pool is now at a meagre 1.7% of customer assets and provides greater comfort. Capital position remains strong and will cushion asset growth in the credit up-cycle. While we see levers in place, we would await for better clarity on long-term growth strategy for the bank under the leadership of the new management (change of guard will be effective from...

The stock may remain volatile in the near term, in line with asset quality developments. Our TP is 718 (on an upgraded multiple of 2.5x Sept-20E ABV of Rs 287). Over FY16-18, AXSB has stumbled over several setbacks, namely (1) Corporate NPAs have blown up to 15%, (2) Very adverse Asset Quality Divergence reporting, (3) Several cases of non-compliance at branches during demonetization, and (4) The RBIs nudge to the AXSB Board to reconsider extension of the MD & CEOs tenure.

Axis Bank has announced appointment of Amitabh Chaudhry as the new MD & CEO of the bank for a period of three years with effect from 1st January 2019. Bank has already received RBI approval on the same. This move will be perceived positively as it ends uncertainty which emerged after resignation of Shikha Sharma on account of RBI not approving her re-appointment. Mr.Chaudhry is currently MD & CEO of HDFC Standard Life Insurance and has formidable track record with wide experience in leadership role. He also has experience in corporate banking in the past. With such rumors already being there, its stock has given a return of 25% over last 2 months. We believe large...