Buy Axis Bank; target of Rs 1100: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Axis Bank has recommended buy rating on the stock with a target price of Rs 1100 in its research report dated March 02, 2023.

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March 02, 2023 / 18:10 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Axis Bank

Axis-Citi deal concluded on 1stMarch’23 for a consideration of Rs116bn. While acquired asset portfolio at Rs273bn was largely intact (post deal announcement in Mar’22), deposits saw a rundown of Rs102bn to Rs399bn. Hence the deal value saw Rs7.2bn reduction. Capital consumption was lower at 177bps than expected 230bps, hence AXSB’s CET-I ratio would be higher at ~14% by Q4FY23 (estimate ~13%) providing cushion for future growth. Although a <=15% loan CAGR (our estimates) could be self-funded, growing at 20% entail a capital raise. Immediate benefits of acquisition include addition of superior quality CC portfolio (Rs89bn) coupled with CASA boost of 150bps.

Outlook

We expect this business to turn profitable by H2FY25E given (i) post-tax integration costs of Rs15bn and (ii) opex optimization would happen only post integration. As change in FY23E/24E/25E PAT is ~1%, our multiple/TP basis Sep’24ABV are unchanged at 2.3x/Rs1,100. Retain ‘BUY’.

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