Axis Bank Ltd. share price target

We retain Hold on Axis Bank with TP revised lower to Rs520. The quarter saw bank upfront a substantial part of its watchlist exposure into NPA (slippages came in at Rs165.4bn or 15% of loans annualised). Resultant, Q4'18 results were lower to our / street estimates on both profitabiity and asset quality front. With large part of stressed assets recognised, focus now shifts towards growth. Loan loss provisions is expected to remain elevated (especially in H1FY19), however with healthy coreoperating profit we expect RoE to scale towards 14-15% levels by end-FY20e....

The bank accelerated corporate stress recognition with NPA slippages at Rs 165.4 bn vs Rs 44.3 bn in Q3FY18. Of the corporate slippages of ~ Rs 139.0 bn ~ 90% came from the disclosed stress list. However of particular concern are high non-corporate slippages, ~ Rs 259 bn (4.0% annualized) which is quite disappointing.

AXSB reported a loss of INR21.9b, led by elevated provisions, as the bank accelerated recognition of stressed assets, leading to slippages of INR165.4b(15.4% annualized). NII stood at INR47.3b (flat QoQ/YoY; 2% miss). NIM contracted 50bp YoY, negating 18% YoY advances growth. Other income declined 7.5% YoY to INR27.9b due to weak treasury income against a high base. This, coupled with 10%/14% QoQ/YoY rise in opex, led to a16% YoY decline in PPoP. Loan growth stood healthy at 18% YoY (+23% YoY in retail; +20% YoY in SME).Deposit base grew much faster off a sequentially low base at 11% QoQ.Reported CASA mix, thus, increased 500bp QoQ to 54% (46% on average basis,flat QoQ)

Axis Bank accelerated the recognition of stressed assets in 4QFY18 driven by RBI's revised stressed asset guidelines. Consequently, slippages jumped to ~Rs163bn (slippage ratio of 4.2%, NOT annualized). Net Non-NPL stress pool of the bank thus reduced sharply to 2.7% of loans, as against 4.5% in 3QFY18. We see this as a positive move despite the near-term negative impact on P&L; (loss of INR 21.9bn in 4QFY18). Management has sounded confident that NPL recognition is nearly complete and should reach its logical end by 1HFY19. We were earlier building in provisions of INR 270bn over 4QFY18-FY20E for the bank and we continue to expect similar overall provisioning requirement, with INR 200 bn pending over...

Axis Bank Ltd. (AxisB) posted strong numbers for Q3FY18 in terms of business growth and profitability while showing improvement in assets quality (62 bps QoQ reduction in GNPA ratio to 5.28% v/s 5.90% in previous quarter). Credit book expanded by six quarter high rate at 21% YoY, despite this NII grew by 9.2% YoY leading to ()5 bps YoY & (7) bps QoQ compression in NIM to 3.38%. Net profitability of the bank improved by 25.3% YoY to Rs7,264.4 mn on the back of significant reduction in the provisioning for NPAs. We see improvement in AxisB's earnings and assets quality going forward, however elevated credit cost (PCR to be...

Though slippages ratio continued to remain high at 4.3%, it improved remarkably from 9.3% in Q2FY18. Nearly 65% of slippages came from corporate accounts, 93% of which camefrom the below investment grade loans. The bank also reported strong recovery and upgradations (282% QoQ) led by (i) substantial cash recovery in an IT/ITES account classified as NPA, (ii) upgradation of a steel account and (iii) NPA sales to stressed-asset funds. As a result, Gross/Net non-performing assets (NPA) ratio improved by 62/56 bps sequentially to 5.3%/2.6%. We believe that the bank is in an early stage of resolution and recovery. Hence, we expect Gross/Net NPA...

Axis Bank Ltd Q3FY18 results comment NII rose to Rs. 4731.52 Cr in Q3FY18 compared to Rs. 4539.62 Cr in Q2FY18.

Maintain NEUTRAL with a TP of Rs 596 (2x Mar-20 ABV of Rs 298). AXSBs 3Q reported profits rose 25% YoY, but a deeper assessment suggests otherwise. Better asset quality (G/NNPA -62/56bps QoQ) owes more to higher write-offs (Rs 28.2bn) and NPA sale (~Rs 20bn). Retail and SME slippages shot up, too. NIMs, surprisingly, dipped to 3.38% (11bps QoQ) despite robust loan growth (+21% YoY), CD ratio (~103%, +440bps QoQ) and slippages moderating to 4.26% ann. (-460bps QoQ). Stagnant SA deposits disappointed vs peers.

ICICI Securities Ltd | Retail Equity Research Axis Bank reported an overall healthy quarter Slippages were at | 4428 crore vs. | 8936 crore QoQ. Absolute GNPA was at | 25000 crore vs. | 27402 crore QoQ. GNPA ratio was at 5.28% vs. 5.9% QoQ while PCR increased to 66% vs. 60% QoQ...

NIM dropped by 7bps sequentially, management hinted NIMs have bottomed NII as well as PAT is 4% and 34% below our estimates Key Highlights and Investment Rationale Outlook: Management keeps on changing its goalpost in terms of outlook on asset quality. From its earlier guidance on slippages from watch list which they eventually revoked, is now targeting against the pool of assets rated BB & below which is indeed fairly large (Rs161bn). Current pool of watchlist, restructuring and outstanding security receipts stands at 3.6% of loan book. Although slippages are likely to see a...