Buy Axis Bank, target price Rs 996: HDFC Securities

HDFC Securities has buy call on Axis Bank with a target price of Rs 996. The current market price of Axis Bank Ltd. is Rs 646.8. Time period given by analyst is one year when Axis Bank Ltd. price can reach defined target.

Axis Bank Ltd., incorporated in the year 1993, is a banking company (having a market cap of Rs 199312.69 Crore).

Axis Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest and Interest On Balances with RBI and Other Inter-Bank Funds for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 23000.69 Crore, up 4.12 % from last quarter Total Income of Rs 22091.19 Crore and up 9.38 % from last year same quarter Total Income of Rs 21028.45 Crore. The bank reported net profit after tax of Rs 4417.73 Crore in latest quarter.

Investment Rationale
Axis Bank delivered a mixed bag with earnings marginally ahead of estimates, driven by lower credit cost (60bps annualised). However, PPOP was impacted by moderation in loan growth/ margins and higher opex. Net slippages were muted (0.1% of loans) even as the restructured pool and sub-investment grade portfolio improved sequentially. Despite a gradual shift in its incremental loan mix towards higher-yielding loans, we do not yet see evidence of AXSB’s ability to exercise better pricing power, which remains a key driver for RoA reflation. It trims FY22/FY23E earnings estimates by 4-5% each to factor in higher cost-to-assets and maintains BUY with a revised SOTP-based target price of INR996 (standalone bank at 2.0x Mar-24 ABVPS).


Promoter/FII Holdings
Promoters held 9.7 per cent stake in the company as of 31-Mar-2022, while FIIs owned 51.01 per cent, DIIs 26.42 per cent.