Broker's call: Axis Bank (Buy)

| Updated on July 27, 2021

Centrum Broking

Axis Bank (Buy)

Target: ₹825

CMP: ₹731.75

Axis Bank’s earnings were mixed. NII/loan growth were in line while NIM was a tad below. NIM may enhance as RIDF loans decline and higher yielding retail and CASA share rise. Opex was a miss, led by higher staff cost. Net slippages were a miss at ₹40 billion (₹3,120 crore) of which retail were ₹374 crore (mainly mortgages). As per the bank, stress build-up is transitory and recoveries may gather pace from Q3FY22. Mortgage slippages should not be worrisome since LTV is comfortable. Restructured pool rose q-o-q from 30bps to 36bps. Buffer provisions at ₹5,000 crore or 81 bps and CET-1 at 15.4 per cent give added cushion. There is no material change in FY22/23E PAT and we would lower provisions on more visibility on recoveries, a key monitorable. Buffer provisions and healthy CET-1 provide balance sheet strength that could aid growth. We maintain multiple at 2.2x FY23ABV also keeping our target price unchanged at ₹825. Risks: higher stress.

Published on July 27, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like