Buy Axis Bank; target of Rs 1150: FIFL

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Buy Axis Bank; target of Rs 1150: FIFL

Fortune Interfinance (FIFL) is bullish on Axis Bank and has recommended buy rating on the stock with a target of Rs 1150 in its January 24, 2012 research report.

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Fortune Interfinance (FIFL) is bullish on Axis Bank and has recommended buy rating on the stock with a target of Rs 1150 in its January 24, 2012 research report.

"Despite the Challenging environment, Axis Bank reported a solid Q3FY12 with earnings growth of 24 % yoy driven up by robust revenues. While loan growth at 20% was much lower than Q2. Overall business growth was impressive and exceeded the industry average. CASA ratio and NIM's were stable despite the tight interest rate scenario."

"The bank's NII grew by 23.5% yoy to Rs 21.4bn, in line with expectation. However net profit was ahead of expectation aided by strong growth in non interest income. The growth in other income was aided by strong growth in fee income and higher trading gains. Advance growth was strong at 20.4%yoy (6.2%qoq), while deposit growth was even stronger at 34%yoy (7.3%qoq), resulting in a marginal drop of 70bps in CD ratio to 71.3%. Despite strong growth in advances, NIM's held up strong at 3.75%.The bank did not give any negative surprise on the asset quality front with GNPA ratio remaining stable at 1.1%. However led by lower provisions, NNPA ratio increased marginally to 0.4%.While slippage ratio (annualized) was stable at 1.2% with slippage of Rs5.4bn, the bank did additional restructuring of Rs3bn during the quarter.   For the quarter, net profit registered healthy 23.7% yoy and 19.8% qoq growth to Rs11bn, led by the robust 24.6% yoy and 15.8% qoq growth in other income to Rs14.2bn (owing to the sharp rise in forex income of Rs1.3bn) and NII increasing 23.5% yoy and 6.6% qoq to Rs21.4bn. C/I ratio improved to 42.3% (45.2%) sequentially, while remaining flat yoy."

"Axis Bank continues to register healthy operating performance despite the challenging business environment. The rising slippages are expected to have marginal impact on the bank's profitability. We revise upwards our earnings estimate. Over FY11-13, we expect the bank's earnings to increase at 19.2% CAGR, led by healthy operating income. We at FIFL believe that at the CMP of Rs1,020 the stock is trading at 1.63x and FY12E and FY13E P/BV. We maintain Buy, with a target price of Rs 1,150 based on 1.84x FY13E P/BV and implying 12.74% upside from current levels," says Fortune Interfinance research report.      

Non-Institutions holding more than 90% in Indian cos

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To read the full report click on the attachment