Prabhudas Lilladher has given Buy recommendation for Axis Bank with a target price of Rs. 940 in its research report issued on Jul 26, 2022
Prabhudas Lilladher’s research report on Axis Bank
Axis bank core earnings were better driven by NIM beat and lower provisions led by steady asset quality. Loan growth at -0.9% QoQ was lower as corporate declined since AXSB evaded pricing pressure while higher yielding retail (SBB, agri, CC, and PL) saw strong traction, which might continue. Bank suggested that even if corporate growth is boosted, spread would not be diluted. Preference for profitability over growth could bode well, as systemic asset quality risks are benign. Cost to assets would remain elevated although target is to reduce it from 2.2% to 2.0% over FY22-25E. Asset quality improved QoQ with controlled net slippages and reduction in stressed pool. Valuation at 1.7x on FY24 ABV is comforting and discount to ICICIBC should narrow as RoE may enhance from 12.0% to 14.5% over FY22-24E.
Outlook
Maintain multiple at 2.3x FY24 ABV and TP at Rs940. Retain BUY.