KR Choksey has given Accumulate recommendation for Axis Bank with a target price of Rs. 807 in its research report issued on Jul 28, 2021
KR Choksey’s research report on Axis Bank
In Q1FY22, Net Interest Income (NII) grew 11% YoY to INR 7,760 Cr from INR 6,985 Cr in Q1FY21. Net interest margin (NIM) for Q1FY22 stood at 3.46%. Fee income for Q1FY22 grew 62% YoY to INR 2,668 Cr leading to PPOP growth of 10% YoY in Q1FY22 at INR 6,416 Cr. Provisions stood at INR 3,532 Cr in Q1FY22, up 7.2% YoY. PAT was down sequentially by 19% but grew 94% YoY at INR 2,160 Cr during Q1FY22 driven by lower provision of yearly basis and higher operating profits. The Bank’s advances grew 12% YoY to INR 6,14,874 Cr and the total deposits grew by 16% YoY in Q1FY22. As on 30th June 2021, the Bank’s reported Gross NPA and Net NPA levels were 3.85% and 1.20% respectively as against 3.70% and 1.05% as on 31st March 2021. Overall capital adequacy ratio (CAR) including profit for Q1FY22 stood at 19.01% with CET 1 ratio of 15.42%. The Bank’s domestic subsidiaries deliver strong performance with annualized profit closer to ~ INR 1,000 Cr in Q1FY22.
We value the bank by assigning a P/B multiple of 2x on FY23E adjusted BV of INR 403 and increase the Target Price to INR 807 per share (earlier TP: INR 770 per share), implying a potential upside of 11.6% over the CMP. Accordingly, we upgrade the rating on the shares of Axis Bank Ltd. to an “ACCUMULATE”.