HDFC Securities' research report on Axis Bank
Axis Bank announced the acquisition of Citibank’s cards, consumer lending, and wealth businesses in a transaction that is likely to be closed over the next 9-12 months. At an acquisition cost of US$1.6bn, while the deal appears to be a bargain for Axis Bank, the value accretion from Citi’s portfolio over the medium term is contingent on a host of factors including retention of existing customers, Axis Bank’s ability to continually add customers of such profile and its ability to up-sell and cross-sell. Although the Citibank transaction adds significant heft to Axis Bank’s competitive positioning across cards and wealth management businesses, we believe that Axis Bank will need to up its game in order to create sustainable value from the Citibank portfolio.
Outlook
Especially given the distinct and superior customer profile that gets added through this transaction, we believe that synergies are likely to be back-ended and are conditional on significant frontloading of investments. At CMP, Axis Bank provides good margin of safety; we maintain BUY with TP of INR950.
More Info
At 17:30 Axis Bank was quoting at Rs 760.65, up Rs 10.45, or 1.39 percent.
It has touched an intraday high of Rs 763.90 and an intraday low of Rs 751.40.
It was trading with volumes of 449,361 shares, compared to its thirty day average of 339,554 shares, an increase of 32.34 percent.
In the previous trading session, the share closed up 1.72 percent or Rs 12.65 at Rs 750.20.
The share touched its 52-week high Rs 866.60 and 52-week low Rs 626.40 on 25 October, 2021 and 12 April, 2021, respectively.
Currently, it is trading 12.23 percent below its 52-week high and 21.43 percent above its 52-week low.
Market capitalisation stands at Rs 233,500.37 crore.
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