Axis Bank Ltd. share price target

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...

AXSB posted a particularly weak 2Q with (1) A sharp crack in asset quality, as slippages shot up to 10% ann. (2) So far only ~39% of the FY16 watchlist has slipped, pointing towards more upcoming stress, (3) A 900bps decline in coverage even after provisioning tripled sequentially, (4) Additional SDR and 5-25 of Rs 8bn and (5) Opex growth of 6% seq.

And AXSB management now believes slippages could exceed 60% of the watchlist though it did not have guidance on how much more. The management however did state FY17E could see the slippages peak with FY18E being a more mellowed year. Given that ~39% of watchlist has already dissolved due to slippages in H1FY17, the slippage trajectory in H2FY17E is expected be relatively better. Overall, the results and the management commentary reiterates our negative...

Despite slow down in the industry, Axis Bank continues to deliver strong business growth: Axis Bank has been able to outpace the industry growth delivering 19% CAGR in loan book over FY12-16. The key driving force has been the retail business (39% CAGR), whose share has gone up to 41% from 21% during the same period. The management has be..

AXSB reported a weak 1QFY17, led by higher slippages (4.3%), a fall in margins (20bps), slower fee growth (11%) and higher opex ( 23%).