14 October 2010

Emkay: Axis Bank Q2FY11 Update; Slippage remains high; REDUCE; Target Price: Rs1,200

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Axis Bank
Earnings growth healthy; Slippage remains high


REDUCE

CMP: Rs 1,563                                       Target Price: Rs 1,200

n     Axis Bank’s (AXSB) Q2FY11 NII at Rs16.2bn marginally ahead of expectations driven by 36% growth in advances and 18bps expansion in NIMs
n     Higher growth in NII was partially offset by lower trading gains and higher operating expenditure
n     Slippages continue to remain high resulting in higher credit costs. Slippages for Q2FY11 at 1.7% vis-à-vis 1.5% in FY10 and 1.6% in Q1FY11
n     Valuations unattractive at 3.0x FY12E ABV with slippages remaining high. Continue REDUCE rating with TP of Rs1,200

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