Buy Axis Bank; target of Rs 1130: Motilal Oswal

Motilal Oswal is bullish on Axis Bank recommended buy rating on the stock with a target price of Rs 1130 in its research report dated March 01, 2023.

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March 02, 2023 / 11:20 IST

26 Aug, 2025 12:21

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Motilal Oswal's research report on Axis Bank

AXSB has completed the acquisition of Citibank India's consumer banking business for a cash consideration of ~INR116b. The deal includes the credit card, wealth and retail banking operations of both Citibank India and Citicorp Finance. It has acquired loans/deposits worth INR273b/INR399b, including the credit card book of INR86b. AXSB’s credit card book has increased by 42% to INR292b. Wealth management AUM has risen ~33% to INR3.8t, making it the third largest player by combined AUM. AXSB has added ~2.4m unique customers, complemented by Citibank's affluent customer segment, and gained access to 21 branches and 459 ATMs. It has retained 3,200 Citibank employees. While the overall synergies in terms of cost savings will start to accrue from CY24, the bank will take a one-time hit in its 4QFY23 P&L related to 1) charge-off of Goodwill and other intangibles, 2) policy harmonization cost, and 3) implementation expenses. Thus, the CET I ratio is likely to moderate by ~177bp to ~13.8%. In the long term, the deal’s success would depend on how well AXSB is able to cross-sell its entire bouquet of banking products to Citi customers and gain from Citi’s well recognized digital and operation processes.

Outlook

Factoring in the one-time charge-off and other costs and profitability, we estimate RoA/RoE of 1.9%/17.6% by FY25. We have a Buy rating on AXSB with a TP of INR1,130 (2.0x Sep’24E P/ABV for the standalone bank).

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