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AXIS BANK
(Rating: Buy, CMP: Rs. 1039; Target: Rs. 1320; Upside: 27%; Investment Period: 6-12 months)
Investment Rationale
• Concerns over rising interest rates and further key policy rates hike in September 2011v has taken a toll on
banking and financial stocks with many stocks sharply off their November 2010 highs.
• Axis Bank has witnessed strong growth in its deposits and advances despite large base. Total deposits and
advances have grown at a CAGR of 36% and 45% to Rs. 189238 cr and Rs 142408cr respectively in FY11.
• The bank's efforts to reduce wholesale deposits and improve its low-cost deposit ratio through retail savings
augur well for its margins. It has managed to reduce the proportion of wholesale deposits from 41% in March
2011 to 39% in June 2011.
• The credit-deposit ratio at 71.8% is also low which can further improve as the credit off-take picks up.
Additionally, recent hikes in lending rates are yet to reflect on the bank's margins. All these factors would help
the bank maintain the NIM at current levels if not improve it in the coming quarters.
At CMP of Rs 1039, the stock is trading at a P/E of 11.48 on TTM basis (EPS on TTM basis is Rs 87.07).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
AXIS BANK
(Rating: Buy, CMP: Rs. 1039; Target: Rs. 1320; Upside: 27%; Investment Period: 6-12 months)
Investment Rationale
• Concerns over rising interest rates and further key policy rates hike in September 2011v has taken a toll on
banking and financial stocks with many stocks sharply off their November 2010 highs.
• Axis Bank has witnessed strong growth in its deposits and advances despite large base. Total deposits and
advances have grown at a CAGR of 36% and 45% to Rs. 189238 cr and Rs 142408cr respectively in FY11.
• The bank's efforts to reduce wholesale deposits and improve its low-cost deposit ratio through retail savings
augur well for its margins. It has managed to reduce the proportion of wholesale deposits from 41% in March
2011 to 39% in June 2011.
• The credit-deposit ratio at 71.8% is also low which can further improve as the credit off-take picks up.
Additionally, recent hikes in lending rates are yet to reflect on the bank's margins. All these factors would help
the bank maintain the NIM at current levels if not improve it in the coming quarters.
At CMP of Rs 1039, the stock is trading at a P/E of 11.48 on TTM basis (EPS on TTM basis is Rs 87.07).
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