Multi Baggers
Axis Bank
BSE ID : 532215 NSE ID : AXISBANK
RECOMMENDED PRICE 703.10
PEAK FROM RECO 1009.95 43.64%
CURRENT PRICE 1063.15 Resource id #18
Axis Bank is India`s third largest private sector bank, offering a wide spectrum of financial products and services to customer segments spanning retail, Small and Medium Enterprises (SMEs) and corporate businesses. The bank is currently trading at 2.71x of TTM book value of Rs 259.43. On the back of strong growth strategy with robust financial performance in Q3FY19, bank has guided for healthy ROE going forward. All these infuse optimism in bright future prospects of bank. Hence, we recommend ``Buy`` on the stock with price target of Rs 830 (appreciation of almost 18%) for long term investment.
Axis Bank is India`s third largest private sector bank, offering a wide spectrum of financial products and services to customer segments spanning retail, Small and Medium Enterprises (SMEs) and corporate businesses. As on 31st December 2018, the Bank had a network of 3,964 domestic branches and extension counters situated in 2,321 centres compared to 3,589 domestic branches and extension counters situated in 2,082 centres last year. As on 31st December 2018, the Bank had 12,705 ATMs and 3,548 cash recyclers spread across the country. It also has 11 overseas offices with branches in Singapore, Hong Kong, Dubai (at the DIFC), Shanghai and Colombo; an offshore banking unit at International Financial Service Centre (IFSC), Gujarat International Finance Tec-City (GIFT City), Gandhinagar; representative offices in Dubai, Abu Dhabi, Sharjah and Dhaka; and an overseas subsidiary in London, UK.
Robust Financial Performance: During Q3FY19 bank has witnessed whopping jump of more than 130 % in its bottomline at Rs 1680.85 Cr on YoY basis. The Bank’s operating Profit for the same quarter grew 43% YOY to Rs 5,525 crore. The Bank’s Net Interest Income (NII) grew 18% YOY to Rs 5,604 crores during Q3FY19. Net interest margin for Q3FY19 stood at 3.47%, Gross slippages in the quarter were Rs 3,746 crores, or 0.70% of Gross Customer Assets, compared to Rs 4,428 crores in Q3FY18. Net Slippages in the quarter were Rs 2,124 crores, or 0.40% of Gross customer assets. Net Slippages in Retail are down 18% from Q3 FY18.
Strong ROE guidance with focus on three vectors: Bank has guided to deliver 18% ROE on a sustainable basis by focusing on three vectors Growth, Profitability and Sustainability. On growth vector bank’s focus over the next 3 years would be to improve deposit growth materially to fund its strong loan growth aspirations, establish leadership in payments and digital capabilities, and to materially scale up its subsidiaries. On profitability vector, bank intend to make all significant portfolio mix choices based on an assessment of Risk Adjusted Return on Capital, or RAROC. Bank also intend to focus on improving its cost efficiency & reducing the credit costs sustainably below its long-term averages. On Sustainability vector, bank is strengthening its technology, analytics, operations or process; & investing in its risk management architecture.
Valuation: The bank is currently trading at 2.71x of TTM book value of Rs 259.43. On the back of strong growth strategy with robust financial performance in Q3FY19, bank has guided for healthy ROE going forward. All these infuse optimism in bright future prospects of bank. Hence, we recommend ``Buy`` on the stock with price target of Rs 830 (appreciation of almost 18%) for long term investment.
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Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advice. Reader is requested to rely on his own decision and may take independent professional advice before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned herein and the same have acted upon or used the information prior to, or immediately following the publication.
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