KR Choksey has given Buy recommendation for Axis Bank with a target price of Rs. 936 in its research report issued on May 02, 2022

KR Choksey’s research report on Axis Bank

AXSB’s Net Interest Income (NII) grew 16.7% YoY to INR 88,191 Mn in Q4FY22. Net interest margin (NIM) for Q4FY22 stood at 3.49%. The bank’s operating profit for the quarter was INR 64,660 Mn, grew 12.7% YoY. Net profit grew 53.8% YoY from INR 26,771 Mn in Q4FY21 to INR 41,178 Mn in Q4FY22. Its balance sheet grew 19% YoY and stood at INR 1,17,51,781 Mn as on 31st March 2022. The total deposits grew by 17.7% YoY. The advances grew 15.2% YoY to INR 70,76,960 Mn as on 31st March 2022. As on 31st March 2022, the Bank’s reported Gross NPA and Net NPA levels were 2.83% and 0.73% respectively as against 3.17% and 0.91% as on 31st December 2022. Overall capital adequacy ratio (CAR) including profit for FY22 stood at 18.5%.

Outlook

We have factored CAGR of 15% in advances, 15% in NII, 11% in PPOP, and 45% in PAT, driven by healthy financial metrics on all fronts over FY21-24E. Since our last update, the share price of AXSB has been corrected by 3%. We maintain our target price of INR 936 per share, applying 2x FY24E P/ABV with an adjusted book value of INR 475. This implies an upside of 28.5% over the CMP. We maintain our rating on the share of AXSB at “BUY”.

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