Sharekhan has given Buy recommendation for Axis Bank with a target price of Rs. 940 in its research report issued on Jun 17, 2022
Sharekhan’s research report on Axis Bank
Axis Bank’s focus on growing its asset franchise in a granular manner has started to reflect in the business performance. Share of retail loans has increased from 45% in FY2017 to 57% in FY2022. Retail, SME, and mid-corporate loans remain key focused segments and these segments are growing at a healthy pace in a granular manner. Gross impaired loans have improved sharply from 7.3% in FY2019 to 3.9% in FY2022. Risk weighted assets as a percentage to advances stands at 101% in FY2022 versus 117 % in FY2019. Improvement in RWA to advances is reflecting higher-rated and less risky loans are underwritten. Overall underwriting practices, particularly in wholesale banking, have also improved significantly. With structural improvement in business franchise and higher provision buffers in place, we expect asset-quality challenges to be largely behind for the bank and expect credit cost to normalise going forward.
Outlook
At the CMP, the bank trades at 1.3x and 1.1x its FY2023E/FY2024E core ABV, offering attractive risk reward. We maintain Buy with a PT of Rs. 940. We believe valuations are reasonable, given structural improvement in the franchise.
More Info
At 15:17 hrs Axis Bank was quoting at Rs 629.75, down Rs 5.85, or 0.92 percent.
It has touched an intraday high of Rs 637.40 and an intraday low of Rs 622.05.
It was trading with volumes of 136,958 shares, compared to its thirty day average of 177,561 shares, a decrease of -22.87 percent.
In the previous trading session, the share closed up 0.03 percent or Rs 0.20 at Rs 635.60.
The share touched its 52-week high Rs 866.60 and 52-week low Rs 626.90 on 25 October, 2021 and 17 June, 2022, respectively.
Currently, it is trading 27.33 percent below its 52-week high and 0.45 percent above its 52-week low.
Market capitalisation stands at Rs 193,419.35 crore.