Buy AXIS Bank; target of Rs 1020: Emkay Global Financial

Emkay Global Financial is bullish on AXIS Bank has recommended buy rating on the stock with a target price of Rs 1020 in its research report dated October 27, 2021.

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// else // $ (‘#toptitleTXT’).html(tickTxt+typevar+’already exists in your watchlist’); // //} } //$ (‘.accdiv’).html(”); //$ (‘.accdiv’).html(appndStr); } }, //complete:function(d){ // if(typparam1==1) // { // watchlist_popup(‘open’); // } //} }); }); } else { var disNam =’stock’; if($ (‘#impact_option’).html()==’STOCKS’) disNam =’stock’; if($ (‘#impact_option’).html()==’MUTUAL FUNDS’) disNam =’mutual fund’; if($ (‘#impact_option’).html()==’COMMODITIES’) disNam =’commodity’; alert(‘Please select at least one ‘+disNam); } } else { AFTERLOGINCALLBACK = ‘overlayPopup(‘+e+’, ‘+t+’, ‘+n+’)’; commonPopRHS(); /*work_div = 1; typparam = t; typparam1 = n; check_login_pop(1)*/ } } function pcSavePort(param,call_pg,dispId) { var adtxt=”; if(readCookie(‘nnmc’)){ if(call_pg == “2”) { pass_sec = 2; } else { pass_sec = 1; } var url = ‘//www.moneycontrol.com/mccode/common/saveWatchlist.php’; $ .ajax({url:url, type:”POST”, //data:{q_f:3,wSec:1,dispid:$ (‘input[name=sc_dispid_port]’).val()}, data:{q_f:3,wSec:pass_sec,dispid:dispId}, dataType:”json”, success:function(d) { //var accStr= ”; 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Emkay Global Financial’s report on AXIS Bank

Despite slower growth, lower NIMs and higher opex weighing on PPoP (down 11% yoy), Axis reported a PAT beat at Rs31.3bn (est: Rs27.5bn) mainly due to contained provisions. Growth disappointed again, but asset quality trends were better vs. peers. GNPA ratio was down 32bps qoq at 3.5%, while restructured pool stood at 0.64% (+31bps qoq) of loans. Credit growth remains an irritant (+10% yoy), lagging peers like ICICI (17%)/HDFCB/KMB (15%). However, Axis expects to improve the growth trajectory with the help of retail/SME businesses and a gradual pickup in large corporates. NIM too remains an irritant, but Axis pins hope on better growth/change in the product mix and declining PSL drag. We believe the bank has undergone a major transformational journey in the past few years, fortifying the balance sheet, building strong capital/provision buffers and revving up the digital banking platform and even the subsidiaries.

Outlook

However, it will have to deliver on growth/core-profitability to re-rate from hereon. Factoring in slower-than-expected growth/NIMs, we trim our earnings estimates for FY22-24 by 1-3%. However, we still expect the bank’s RoA/RoE to improve from a low of 0.7%/7% to 1.7% %/17% in FY24E. Retain Buy with a revised TP of Rs1020 (Rs960 earlier), valuing the core bank at 2x Dec’23E ABV and subs/investment at Rs75.

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