Apr 27, 2013, 07.18 PM | Source: Moneycontrol.com
AnandRathi is bullish on Axis Bank and has retained buy rating on the stock with a target of Rs 1635 in its April 25, 2013 research report.
, AnandRathi |
“At 16 percent yoy, Axis Bank’s advances grew faster than its deposits (14.8 percent yoy), thereby stretching the credit-deposit by 84bps yoy to 78 percent. The strong advances growth was driven largely by the retail segment (43.6 percent yoy), now comprising 27.4 percent of advances. NIM rose 14bps yoy (flat qoq) to 3.6 percent, led by a 284-bp yoy rise in the share of CASA to 44.4 percent. The average CASA per branch, at Rs573m, was the highest of its peers.”
“Better productivity, healthy fee-income growth. Cost-to-assets declined 18bps yoy, to 2.4 percent, despite 160 branches added during the quarter. Feeincome rose a healthy 22 percent yoy, led by robust growth in retail fees (31.9 percent yoy). Fees-to-earning assets stood at 2.1 percent, one of the highest of its peers. Treasury profits rose 62.8 percent yoy and comprised 8.5 percent of pre-provisioning profit (7.2 percent in 4QFY12). Excluding treasury, operating profits grew 35.4 percent yoy. Stable asset quality, steady NPA coverage. Gross NPA rose 5.2 percent qoq, with NPA coverage (excl. technical write-offs) up 41bps qoq to 70.6 percent. Incremental slippages fell to 0.9 percent of loans (annualized), lower than the 1.3 percent recorded in 3QFY13. During the quarter, Rs7.9bn of loans were restructured, taking the restructured book to Rs43.7bn (2.2 percent of loans). The bank utilized its strong pre-provisioning profits in 4QFY13 to make contingency provisions of Rs2.4bn, with management maintaining its guidance of 85-90bps of credit costs in FY14.”
“We expect the bank’s retail-asset focus, better deposit franchise and stable asset quality to help it sustain a 1.7 percent RoA over FY14-15. Hence, we retain our Buy rating. At our Mar’14 target, the stock would trade at a P/BV of 2x FY14e and 1.7x FY15e. Our target is based on the two-stage DDM (CoE: 17.2 percent; beta: 1.3; Rf: 8 percent),” says AnandRathi research report.
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