Arihant Capital's research report on Axis Bank
Axis Bank has reported mixed performance during Q4FY22 with strong profit growth, improvement in asset quality, marginal contraction in margins and lower than expected operating performance. Bank has reported 54% YoY growth in profit at INR 4,118 cr was higher than our estimate of INR 4,016 cr, driven by 70% YoY/26% QoQ decline in provisions. Advances growth for the quarter was healthy at 15% YoY/6% QoQ, led by growth across focused business segments. NII for the quarter increased by 17% YoY/2% QoQ to INR 8,819 cr was lower then our estimate of INR 9,196 cr. Operating profit for the quarter grew by 4.5% QoQ and declined by 5.8% YoY to INR 6,466 cr as compared to our estimate of INR 6,953 cr. Credit cost for the quarter declined from 0.9% to 0.7% QoQ. Asset quality of the bank improved as GNPA/NNPA decreased by 35bps/17bps QoQ respectively at 2.8%/0.7%, led by strong upgrades and recoveries. Restructuring pool of the bank declined from 0.63% to 0.52% QoQ, which continues to be lower than the other large private sector banks. NIM declined marginally by 4bps QoQ at 3.49%.
We lower our FY24 earnings estimate by 4% and maintain our Accumulate rating on the stock with a revised target price of INR 927 (earlier INR 942), valuing the bank at 2x FY24E ABV. We expect bank to deliver 1.2%/12.5% RoA/RoE by FY24E.