AXIS BANK -- BUY TARGET PRICE: RS.446 :: Kotak Sec, PDF link

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AXIS BANK
PRICE: RS.402 RECOMMENDATION: BUY
TARGET PRICE: RS.446 FY16E P/E: 12.3X, P/ABV: 2.0X
Q2FY15 results: Core performance marginally better while fresh
stress build-up was slightly higher
Axis bank reported strong core performance on back of strong NIM (3.97%)
along with healthy loan growth (20.3% YoY). PAT growth (18.2% YoY) came
in-line with our expectations largely impacted by higher opex (C/I ratio rose
70bps YoY) as well as higher NPA provisions (58% YoY; 90% QoQ). Reported
NIM came much above the management guidance (~3.50%) largely aided by
higher yield on assets as well as lower funding costs.
Although headline NPLs have been holding well contrary to street
expectations, high exposure to non-operational power portfolio remains a
potential risk, in our view. Incremental stress build-up came marginally
higher at Rs.14.8 bn, but well within the management's guidance range. We
expect earnings to grow 11.3% CAGR during FY14-16E along with healthy
return ratios (RoE: ~17%, RoA: ~1.6%). At CMP, stock trades reasonable at
2.0x its FY16E ABV and hence, we retain BUY rating on the stock with
unchanged TP of Rs.446 based on 2.25x its FY16E ABV.

LINK
http://www.kotaksecurities.com/pdf/pdfs/FUNDAXISBANK20102014100010.pdf