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Axis Bank (CMP: `1,237/ TP: `1,648/ Upside: 33%)
Axis Bank has increased its CASA market share multi-fold over the last eight years
(4.2% as of FY2011) on the back of robust branch and ATM network expansion
(400 branches opened in FY2011 itself). Annual addition of 250+ branches hereon
is expected to lead to a 30-50bp increment in CASA market share every year.
Fee income contribution across a spectrum of services has been a meaningful
2.0% of assets (almost twice the level in PSBs) over FY2009-11.
We expect Axis Bank to raise capital in the next 12-18 months as per our calculations.
(Axis Bank had last raised capital in 2QFY2010, when its tier-I CAR was 9.4%).
Dilution is likely to be book-accretive and will aid in further enhancing the bank's
credit market share going forward.
Axis Bank is trading at 2.0x FY2013E ABV (~35.5% discount to HDFC Bank). The
bank's ALM position vis-à-vis HDFC Bank is currently a disadvantage; however,
with the interest rate cycle close to its peak, in our view, the bank will also benefit
more once interest rates cool off a bit post 1HFY2012. Hence, we maintain our
Buy view on the stock with a target price of `1,648.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Axis Bank (CMP: `1,237/ TP: `1,648/ Upside: 33%)
Axis Bank has increased its CASA market share multi-fold over the last eight years
(4.2% as of FY2011) on the back of robust branch and ATM network expansion
(400 branches opened in FY2011 itself). Annual addition of 250+ branches hereon
is expected to lead to a 30-50bp increment in CASA market share every year.
Fee income contribution across a spectrum of services has been a meaningful
2.0% of assets (almost twice the level in PSBs) over FY2009-11.
We expect Axis Bank to raise capital in the next 12-18 months as per our calculations.
(Axis Bank had last raised capital in 2QFY2010, when its tier-I CAR was 9.4%).
Dilution is likely to be book-accretive and will aid in further enhancing the bank's
credit market share going forward.
Axis Bank is trading at 2.0x FY2013E ABV (~35.5% discount to HDFC Bank). The
bank's ALM position vis-à-vis HDFC Bank is currently a disadvantage; however,
with the interest rate cycle close to its peak, in our view, the bank will also benefit
more once interest rates cool off a bit post 1HFY2012. Hence, we maintain our
Buy view on the stock with a target price of `1,648.
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