Currently Axis Bank is trading at 30%-40% cheaper than Sensex valuation: Lalit Thakkar, Angel Broking

In a chat with ET Now, Lalit Thakkar, MD Institution, Angel Broking shares his views about the the private banking space.

ET Now: Why is Axis Bank one of your top picks from the private banking space?

Lalit Thakkar: If you look at the profitability ratios of Axis Bank within the private space, it is earning a 20 ROE which is similar to what HDFC Bank is earning. The ROE of ICICI Bank is around 15-16 and it will take some time for ICICI to go to 20 ROE. The Axis Bank is trading at 1.8 price to book value and in terms of PE it is hardly trading at 10 PE. Of all the private sectors banks the capital adequacy ratio of Axis Bank is on a lower side. So, this will be the first company which will again go for dilution and infusion in the coming one or two years. Dilutions and infusions are always a book value accretive. So, post dilution probably the stock is trading at 1.6 or 1.5 price to book value. Currently Axis Bank is trading at 30%-40% cheaper than Sensex valuation which is the reason why we like Axis Bank in the space.