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AXIS BANK LTD
The Bank was promoted jointly by the Administrator of the specified undertaking
of the Unit Trust of India (UTI - I), LIC and GIC and other four PSU insurance
companies, i.e. National Insurance Company Ltd., The New India Assurance
Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance
Company Ltd. The Bank has a very wide network of more than 1281 branches
(including 169 Service Branches/CPCs as on 31st March, 2011). The Bank has a
network of over 6270 ATMs as on 31st March, 2011.
Investment Rationale
Axis Bank plans to grow its advances by 22-24% in FY2012 with focus on
corporate and retail (mainly mortgages, automobile) segments. The bank also
plans to diversify its asset book by increasing the proportion of retail advances to
30% of its mix from 21% over the next 2-3 years. 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.
With the present 1400 branches pan India and expected addition of ~200
branches every year will support the business growth. It will also help the bank to
improve its retail segment reach.
Axis Bank has enjoyed healthy asset quality so far with GNPA and NNPA at
1.08% and 0.34% respectively. High exposure to infrastructure and other stressed
sectors may post threat on the asset quality in coming quarters but strong growth
in core income will offset for provision requirements.
Valuations
Axis is among our preferred picks in the banking sector due to its strong deposit
franchise, healthy growth-return profile, and relative discount to peers. Concerns
over asset quality of the bank seem largely discounted in the current market price
and stock is currently available at a significant discount to its historical average.
Currently the stock is trading at 1.7x FY11 P/BV. Hence, we recommend Buy on
Axis Bank with medium to long term horizon with the target price of Rs. 1350.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
AXIS BANK LTD
The Bank was promoted jointly by the Administrator of the specified undertaking
of the Unit Trust of India (UTI - I), LIC and GIC and other four PSU insurance
companies, i.e. National Insurance Company Ltd., The New India Assurance
Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance
Company Ltd. The Bank has a very wide network of more than 1281 branches
(including 169 Service Branches/CPCs as on 31st March, 2011). The Bank has a
network of over 6270 ATMs as on 31st March, 2011.
Investment Rationale
Axis Bank plans to grow its advances by 22-24% in FY2012 with focus on
corporate and retail (mainly mortgages, automobile) segments. The bank also
plans to diversify its asset book by increasing the proportion of retail advances to
30% of its mix from 21% over the next 2-3 years. 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.
With the present 1400 branches pan India and expected addition of ~200
branches every year will support the business growth. It will also help the bank to
improve its retail segment reach.
Axis Bank has enjoyed healthy asset quality so far with GNPA and NNPA at
1.08% and 0.34% respectively. High exposure to infrastructure and other stressed
sectors may post threat on the asset quality in coming quarters but strong growth
in core income will offset for provision requirements.
Valuations
Axis is among our preferred picks in the banking sector due to its strong deposit
franchise, healthy growth-return profile, and relative discount to peers. Concerns
over asset quality of the bank seem largely discounted in the current market price
and stock is currently available at a significant discount to its historical average.
Currently the stock is trading at 1.7x FY11 P/BV. Hence, we recommend Buy on
Axis Bank with medium to long term horizon with the target price of Rs. 1350.
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