Prabhudas Lilladher has given Buy recommendation for Axis Bank with a target price of Rs. 1080 in its research report issued on Oct 21, 2022

Prabhudas Lilladher’s research report on Axis Bank

AXSB saw its strongest quarter with core earnings beating estimates by ~14% led by beat on NIM, fees and asset quality. NIM boost was driven by better loan yields that was a function of higher repo linked pool, increased retail share, focus on rupee loans and shedding of RIDF bonds. Loan growth too was better at 4.2% QoQ mainly led by corporate/SME although deposit growth was slower. Asset quality improved again with lower slippages driving GNPA decline of 26bps QoQ while OTR reduced by 11bps to 0.65%. As per the bank, Citi acquisition may materialize in Q4FY23. We upgrade FY23/24E earnings by ~30%/10% due to higher NII and lower provisions. However, our multiple is maintained at 2.3x as RoE in FY24/25E does not surpass 15%. Levers for RoE expansion are fall in opex/assets and higher loan/deposit accretion.

Re-rating beyond 2.3x would hinge on RoA/RoE gap to ICICIB reducing. Rolling forward to Sep’24 ABV we raise TP from Rs940 to Rs1080. Reiterate BUY.

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