Axis Bank

Stock Information Stock Data

Reco. Date 1/1/2020 52 week High/Low 826/604
Sector branches Banks
Market cap 211170 Face value 2.00
Current Mkt Price 748 Shareholdings
Target 720 Promoter Holding (%) 27.10%
Holding Period 3/9 Month FII / DII (%) 49.90%/13.41%
Financials (Rs in bn)
FY17 FY’18 FY’19
Audited Audited Actual
Paid-up Capital 4.79 5.13 5.14
Reserves & Surplus 552 629 661
Borrowings 1050 1480 1527
Deposits 4143 4536 5484
NII 180 186 217
GNPA (%) 5.04 6.77 5.26
NNPA (%) 2.11 3.40 2.06
PBT 54 1.2 69
PAT 36 2.7 46
EPS 15.4 1.1 18.2
ROAE(%) 6.8 0.5 7.2

Background:
• It is the third largest private sector bank in India. The Bank offers the entire spectrum
of financial services to customer segments covering Large and Mid-Corporates, MSME,
Agriculture and Retail Businesses.
• The overseas operations of the Bank are spread over nine international offices with
branches at Singapore, Hong Kong, Dubai (at the DIFC), Colombo and Shanghai;
representative offices at Dhaka, Dubai, Abu Dhabi and an overseas subsidiary at
London, UK. The international offices focus on corporate lending, trade finance,
syndication, investment banking and liability businesses.

Q2FY20 Highlight:

• NII grew 17 per cent to 61.02bn from 52.32bn

• Peaking out NIM increased sequentially to 3.51 % from 3.40 % highest in the last nine
quarters
• GNPA and NNPA ratio were 5.03 per cent and 1.99 per cent
• Operating leverage improved with 7 bps decline in Cost/avg Assets in H1FY20 over
FY19
 Axis Bank
Potential triggers to watch:

• CASA has dropped 6% YoY to 41%.

• CASA+RTD now form 80% of deposits.
• FY20 PAT estimates are lowered by 10%
• Lower-than-expected loan growth - Expects loan growth of 5-7% over the industry
growth rate much below the historic out performance rate
• Suffered net loss of 112cr due to 2138cr one off deferred tax asset (DTA) fully
adjusted impact
• Gross corporate slippages were 28.62bn - 97 % came from BB and below rated clients
• Slippage numbers have remained elevated
• Added 190 branches which will result increased Cost/Income till revenue builts in 4
quarters
• Current elevated credit cost will take 3 years to go below 1 %
• 4.5 % market share in saving bank deposits and advances not growing materially
• Challenges in corporate recovery.
• Higher slippages, increased credit cost in weak operating environment
• Delayed NCLT resolutions
• Cautious approach for loan growth to avoid margin pressure on core revenues
• Pressure on operating profit growth

Valuation:

• Sell with target price of 720.