Axis Bank Low probability of negative surprise from hereon : Emkay

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Axis Bank

Low probability of negative surprise from hereon

ACCUMULATE

CMP: Rs 1,124                                       Target Price: Rs 1,380

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n     AXSB’s Q2FY12 NII at Rs20bn ahead of consensus. Net profit of Rs9.2bn marginally lower due to higher Opex and provisions

n     NIMs bounce back sharply (50bps qoq) with help of better yields and CASA (up 170bps qoq). We expect lower NIMs in coming quarters due to higher balance sheet growth

n     Slippages move up sharply at Rs5bn, highest in last 6 qrtrs. Rs2.3bn of MFI exposure restructured in Q2FY12. Slippage guidance of 1.3%, marginally higher than our estimate

n     Valuations at 2.2x/1.9x FY12E/FY13E ABV.  Estimates already factor in higher slippages and NIMs compression. Expect no –ve surprise. Upgrade to ACCUMULATE