Moneycontrol PRO
Upcoming Event:Attend Algo Convention Live, 2 Days & 12+ Speakers at best offer Rs.999/-, exclusive for Moneycontrol Pro subscribers. Register now!

Buy Axis Bank; target of Rs 1020: Emkay Global Financial

Emkay Global Financial is bullish on Axis Bank has recommended buy rating on the stock with a target price of Rs 1020 in its research report dated April 29, 2022.

April 30, 2022 / 10:31 AM IST
  • bselive
  • nselive
Todays L/H

Emkay Global Financial's report on Axis Bank

Despite retail-driven healthy credit growth at 15% yoy, Axis Bank continued to report subdued core earnings growth at 9% yoy, mainly led by subdued margins and higher opex, including a one-time expense related to the Citi portfolio acquisition and business/collection-related spends. However, lower LLP led to a slight beat on PAT at Rs41bn (est: Rs40bn). Axis has taken back earlier exit cost/asset guidance of 2% in Q4FY23 (~2% in FY22), as it may look at accelerated investments in the near-to-medium term, and thus may hurt core earnings. However, Axis retains medium-term RoE guidance of 16-16.5% and long-term RoE aspiration of 18%. We have slightly trimmed our earnings estimates, factoring in higher costs but expect RoE to gradually improve to ~14-16% over FY23-25E from ~7%/12% in FY21/22E. Axis has signed a definitive agreement to acquire Citi Bank’s retail portfolio, including cards, CASA rich deposit pool and nearly 3,600 employees, at a higher price of USD1.6bn/Rs123bn (ex-integration cost of Rs15bn). We believe the acquisition will boost the bank’s retail/card portfolios, but the payback period could be longer and would also dilute the CET 1 ratio by 230bps to ~13%, calling for equity/RoE dilution post the acquisition (Q4FY23).


We retain our long-term Buy rating on the stock with a TP of Rs1,020 (value standalone bank at 1.9x FY24E ABV vs. 2x Dec’23 ABV due to higher CoE and subs valuation at Rs73) given steady improvement in RoEs and reasonable valuations. However, the bank’s recent opex conundrum (risk of upward revision in cost/asset guidance for FY23) and the potential impact on core profitability in the near term will impact the stock’s performance.

For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Download your money calendar for 2022-23 here and keep your dates with your moneybox, investments, taxes

Broker Research
first published: Apr 30, 2022 10:31 am
ISO 27001 - BSI Assurance Mark