Buy Axis Bank target of Rs 865: ICICI Direct

ICICI Direct's research report on Axis Bank

Axis Bank reported a healthy balance sheet growth with advances up 15.8% YoY to Rs 550138 crore. Domestic credit growth came in higher at 18% YoY. Growth in retail continued to remain robust at 25% YoY to Rs 291554 crore, led by healthy growth in unsecured portfolio, auto & small business banking, while SME witnessed a marginal blip. The corporate segment grew 9% YoY. Deposit increased 15.1% YoY to Rs 591676 crore, though incremental absolute accretion remained weak as the bank deployed capital raised in Q2FY20. CASA ratio remained stable at 41.2%.

Outlook

However, we remain positive on fundamentals given strong operational performance and focus on risk adjusted return oriented business. Rolling over to FY22E and valuing core bank at 2.2x FY22E ABV, we maintain our target price at Rs 865 (post adding Rs 35 for subsidiaries post 20% holding company discount). We maintain BUY.