Buy Axis Bank; target of Rs 1172: Firstcall Research

“Axis Bank established in 1993 was the first of the new private banks to have begun operations in 1994 after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The Bank as on 30th June, 2011 is capitalized to the extent of Rs. 411.88 crores with the public holding (other than promoters and GDRs) at 52.87%.”

“Axis Bank Ltd. has been promoted by the largest and the best Financial Institution of the country, UTI. The Bank was set up with a capital of Rs. 115 crore, with UTI contributing Rs. 100 crore, LIC - Rs. 7.5 crore and GIC and its four subsidiaries contributing Rs. 1.5 crore each. Erstwhile Unit Trust of India was set up as a body corporate under the UTI Act, 1963, with a view to encourage savings and investment. In December 2002, the UTI Act, 1963 was repealed with the passage of Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 by the Parliament, paving the way for the bifurcation of UTI into 2 entities, UTI-I and UTI-II with effect from 1st February 2003. In accordance with the Act, the Undertaking specified as UTI I has been transferred and vested in the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), who manages assured return schemes along with 6.75% US-64 Bonds, 6.60% ARS Bonds with a Unit Capital of over Rs. 14167.59 crores.”

“Axis Bank Ltd has reported net profit of Rs 12772.70 million for the quarter ended on March 31, 2012 as against Rs 10201.10 million in the same quarter last year, an increase of 25.21%. It has reported Net Income of Rs 60603.20 million for the quarter ended on March 31, 2012 as against Rs 43666.60 million in the same quarter last year, a rise of 38.79%. Total income grew by 31.47% to Rs 76479.40 million from Rs.58170.60 million in the same quarter last year. During the quarter, it reported earnings of Rs 30.91 a share.”

“At the current market price of Rs.1037.55, the stock is trading at 8.57 x FY13E and 7.43 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.121.11 and Rs.139.72 respectively. Net Income and PAT of the company are expected to grow at a CAGR of 26% and 19% over 2011 to 2014E respectively. Price to Book Value of the stock is expected to be at 1.54 x and 1.28 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 1172 for medium to long term investment,” says Firstcall Research report.

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