KR Choksey has given Buy recommendation for Axis Bank with a target price of Rs. 936 in its research report issued on Oct 28, 2021

KR Choksey’s research report on Axis Bank

The Bank’s Net Interest Income (NII) grew 8% YoY to INR 7,900 Cr from INR 7,326 Cr in Q2FY21. Net interest margin (NIM) for Q2FY22 stood at 3.39%. The Bank’s operating profit for the quarter was INR 5,928 Cr while the core operating profit was INR 5,456 Cr. Net profit grew 86% from INR 1,683 Cr in Q2FY21 to INR 3,133 Cr in Q2FY22. The total deposits grew by 18% YOY, both on period end basis and quarterly average balance (QAB) basis. The Bank’s advances grew 10% YoY to INR 6,21,719 Cr as on 30th September 2021. As on 30th September 2021, the Bank’s reported Gross NPA and Net NPA levels were 3.53% and 1.08% respectively as against 3.85% and 1.20% as on 30th June 2021. Overall capital adequacy ratio (CAR) including profit for H1FY22 stood at 20.04% with CET 1 ratio of 15.81%.

Outlook

We have factored in a CAGR of 14.0% in advances, 14.7% in NII, 12.9% in PPOP, and 45.1% in PAT driven by healthy financial metrics on all fronts over FY21-24E. We revise our target price to INR 936 per share (earlier INR 807 per share), applying a P/ABV multiple of 2x to its FY24E adj. Book Value. The revision is based on roll forward from FY23E Adj BVPS to FY24E adj. BVPS. As a result, we upgrade our rating on the share of AXSB to “BUY” (previously HOLD).

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