Tuesday, January 24, 2012

Axis Bank


Buy rating on Axis Bank is maintained with a higher target price of Rs.1186 over one year, as against 
the earlier target   price of Rs.1127.

The TP is hiked on upward revision of its earnings estimates on stable NIM and higher other income.
Earnings estimates for  FY12 have been hiked by 3.7% and by 4.6%, by 4.1% for FY13 & FY14 
respectively.

For 3QFY12, net profit at Rs.1100 crore increased 23.7% yoy. Net interest income at 2140 crore 
increased 23.5% yoy with stable net interest margin at 3.75%.

Slippages remained more or less stable at 1.7% and this seems to be a positive. Stressed assets were 
reported at Rs. 8-8.5billion. It would be a positive if this level could be maintained from going up.

The bank has added 34% of its current branch network during the last two years. Its benefits are 
expected to accrue and will key earnings driver in the near term.

The bank had achieved higher priority sector requirements of around 45% in FY11 against 40% by the 
RBI norms. So the bank need not expand lending in this segment. This coupled with retail loan growth, 
the bank would maintain its profit margins.

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