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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.
In fact, the bank opened 400 branches in FY2011 itself (41.4% yoy). Going forward
as well, annual addition of 250+ branches 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 meaningful,
at 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 the bank’s
capital adequacy at the end of 2QFY2012, including 1HFY2012 profits, stood at
9.3% (Axis Bank had last raised capital in 2QFY2010, when its tier-1 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 1.6x FY2013E ABV (~47% 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 in CY2012. Hence, we maintain our Buy
view on the stock with a target price of `1,383.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
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.
In fact, the bank opened 400 branches in FY2011 itself (41.4% yoy). Going forward
as well, annual addition of 250+ branches 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 meaningful,
at 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 the bank’s
capital adequacy at the end of 2QFY2012, including 1HFY2012 profits, stood at
9.3% (Axis Bank had last raised capital in 2QFY2010, when its tier-1 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 1.6x FY2013E ABV (~47% 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 in CY2012. Hence, we maintain our Buy
view on the stock with a target price of `1,383.
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