Accumulate Axis Bank; target of Rs 790: Prabhudas Lilladher

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Prabhudas Lilladher's research report on IndusInd Bank

Axis bank’s earningsof Rs17.6bn (PLe:27.0bn)were below expectations on back of continued elevated provisions and muted PPOP despite NII being better. NIMs improved, loan growth held up with contribution from bothcorporate & retail but slippages continue to be high albeit coming from disclosed stressed watchlist pool. There have been some additions to the watchlist pool but rate of addition is slower and hence overall watchlist has slightly come off to 1.7% of assets.Bank has been focusing on RTDs and improving presence to improve overall branch banking and garner liabilities which is seeing some positive effects. Recovery towards 16-17% ROEsby FY22looks stretched if credit cost & slippages do not normalizeas gains from operating leverage will be gradual.

Outlook

We retain Accumulate, with TP of Rs790(from 800) based on 2.2x Sep-21 ABVas we adjust credit cost on higher side.

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