Stocks

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

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