Buy Axis Bank; target Rs 1274: ICICIdirect.com

ICICIdirect.com is bullish on Axis Bank and has recommended buy rating on the stock with a target price of Rs 1274, in its April 30, 2012 research report.

"Axis Bank posted strong PAT growth of 25.2% YoY to Rs 1277.3 crore (I Direct estimate: Rs 1249 crore), way above consensus estimate of ~ Rs 1170 crore. Provisions were lower by 45.2% YoY to Rs 139.3 crore, mainly on account of Rs 101 crore reversal in investment depreciation. Advances grew 19.2% YoY to Rs 169759.5 crore led by retail book growth of 35.3% YoY to Rs 37570 crore. Deposit growth was moderate at 16.3% YoY to Rs 220104.3 crore with CASA ratio being flat at 41.5%. Other income growth was subdued at 9.5% YoY to Rs 1587.6 crore. Asset quality was stable which kept provisions at lower levels. We are introducing FY14E with PAT expected at Rs 6034 crore, CAGR of 19.3% over FY12-14E respectively."

"The bank has maintained profitability growth of above 20%+ even in current challenging environment. Management expects to maintain credit cost in FY13E and does not expect major negative surprise in asset quality. It is expected to register strong return ratios with RoA and RoE at 1.7% and 19.5%, respectively. We value the bank at 1.6x its FY14E ABV with Buy rating and maintain a target price of Rs 1274,” says ICICIdirect.com research report.

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