3QFY2012 Result Update | Banking

January 20, 2012

Axis Bank
Performance Highlights

Particulars (` cr) NII Pre-prov. profit PAT 3QFY12 2,140 2,059 1,102 2QFY12 2,007 1,776 920 % chg (qoq) 6.6 16.0 19.8 3QFY11 1,733 1,658 891 % chg (yoy) 23.5 24.2 23.7

BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Banking 41,587 1.4 1,461/785 2,21,473 10 16,739 5,049 AXBK.BO AXSB@IN

`1,008 `1,299
12 Months

Source: Company, Angel Research

For 3QFY2012, Axis Bank reported healthy 23.7% yoy growth in its net profit to `1,102cr, above our as well as street estimates. Stable NIMs, continuance of traction in other income growth and largely stable asset quality were the key highlights of the results. We maintain our Buy recommendation on the stock. NIMs remain stable, however, healthy traction in fee income continues; asset quality remains under control: Business growth momentum for the bank remained on track in 3QFY2012 as well. Advances grew by healthy 6.2% qoq; on a yoy basis, the base effect sedated the advances growth to 20.4%. Deposits accretion sustained the traction gained in 2QFY2012 into 3QFY2012 as well, with rise of 7.3% qoq and 33.9% yoy. CASA deposits on a daily average basis grew at a moderate pace of 13.2% yoy. CASA ratio remained steady around the 42% mark. The banks reported NIM for the quarter remained largely stable at 3.75% in spite of a 15bp qoq rise in cost of funds. However, going forward, management expects some moderation in NIMs. Asset-quality pressures were well in check, with annualized slippage ratio at 1.5%, in-line with trends witnessed in 2QFY2012 and FY2011. Restructuring for the quarter was also in-line with `300cr witnessed in 2QFY2012. Gross and net NPA ratios were stable sequentially at 1.1% and 0.4%, respectively. The bank added 47 branches during the quarter. Tier-I CAR including profits stood at 9.6%. Outlook and valuation: The banks substantial branch expansion over the past 2-3 years (407 in FY2011 itself, a 41.4% yoy increase) is expected to yield meaningful results over FY2012-13, leading to more CASA market share gains. We are cautious on the asset-quality front and have built in higher delinquencies; however, we note that the rise in NPAs is likely to be well within manageable limits for Axis Bank. We remain positive on the bank, owing to its attractive CASA franchise, rapid branch expansion, multiple sources of sustainable fee income, strong growth outlook and A-list management. The stock is trading at 1.6x FY2013E ABV. We continue to maintain our Buy view on the stock with a target price of `1,299.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 37.2 7.0 42.9 12.9

Abs. (%) Sensex Axis Bank

3m (1.2) (10.8)

1yr (12.1) (21.6)

3yr 83.9 138.6

Key financials
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%)
Source: Company, Angel Research

FY2010 5,004 35.8 2,515 38.5 3.1 62.1 16.2 2.6 1.5 19.2

FY2011 6,563 31.1 3,388 34.8 3.2 82.5 12.2 2.2 1.6 19.3

FY2012E 8,132 23.9 4,176 23.2 3.1 101.7 9.9 1.9 1.5 20.3

FY2013E 9,979 22.7 4,895 17.2 3.1 115.4 8.7 1.6 1.5 20.2

Vaibhav Agrawal
022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com

Shrinivas Bhutda
022 3935 7800 Ext: 6845 shrinivas.bhutda@angelbroking.com

Varun Varma
022 3935 7800 Ext: 6847 varun.varma@angelbroking.com

Please refer to important disclosures at the end of this report

Axis Bank | 3QFY2012 Result Update

Exhibit 1: 3QFY2012 performance summary

Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - Fee Income - Treasury Income - Others Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & Contingencies - Provisions for NPAs - Other Provisions PBT Provision for Tax PAT
Source: Company, Angel Research

3QFY12 2QFY12 % chg (qoq) 3QFY11 % chg (yoy) 5,777 3,964 1,775 15 23 3,637 2,140 1,430 1,312 1,223 118 90 3,570 1,511 542 969 2,059 422 334 88 1,637 535 1,102 5,276 3,688 1,549 11 28 3,269 2,007 1,235 1,207 1,121 28 87 3,242 1,467 499 968 1,776 406 247 159 1,370 450 920 9.5 7.5 14.6 38.5 (19.9) 11.3 6.6 15.8 8.7 9.1 325.5 3.5 10.1 3.0 8.7 0.1 16.0 4.1 35.2 (44.3) 19.5 18.9 19.8 3,838 2,601 1,167 48 23 2,105 1,733 1,148 1,013 968 135 45 2,881 1,222 396 826 1,658 314 233 81 1,345 453 891 50.5 52.4 52.1 (67.9) (0.2) 72.7 23.5 24.6 29.5 26.3 (12.7) 97.6 23.9 23.6 36.8 17.3 24.2 34.6 43.3 9.2 21.7 18.0 23.7

Exhibit 2: 3QFY2012 Actual vs. Angel estimates

Particulars (` cr) Net interest income Other income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Company, Angel Research

Actual 2,140 1,430 3,570 1,511 2,059 422 1,637 535 1,102

Estimates 2,126 1,302 3,428 1,492 1,936 438 1,498 486 1,012

Var. (%) 0.7 9.8 4.1 1.3 6.3 (3.7) 9.3 10.0 8.9

January 20, 2012

Axis Bank | 3QFY2012 Result Update

Exhibit 3: 3QFY2012 performance analysis

Particulars 3QFY12 2QFY12 % chg (qoq) 3QFY11 % chg (yoy) Balance sheet Advances (` cr) 148,739 140,089 6.2 123,547 20.4 Deposits (` cr) 208,693 194,455 7.3 155,811 33.9 Credit-to-Deposit Ratio (%) 71.3 72.0 (77)bp 79.3 (802)bp Current deposits (` cr) 39,459 35,354 11.6 26,799 47.2 Saving deposits (` cr) 47,297 46,786 1.1 39,132 20.9 CASA deposits (` cr) 86,756 82,140 5.6 65,931 31.6 CASA ratio (%) 41.6 42.2 (67)bp 42.3 (74)bp CAR (%) 11.8 11.4 43bp 12.5 (68)bp Tier 1 CAR (%) 8.3 8.5 (23)bp 8.9 (61)bp Profitability Ratios (%) Cost of funds 6.3 6.2 15bp 4.8 155bp Reported NIM 3.8 3.8 (3)bp 3.8 (6)bp Cost-to-income ratio 42.3 45.2 (291)bp 42.4 (11)bp Asset quality Gross NPAs (` cr) 1,914 1,744 9.8 1,483 29.1 Gross NPAs (%) 1.1 1.1 2bp 1.1 1bp Net NPAs (` cr) 683 549 24.4 386 77.1 Net NPAs (%) 0.4 0.3 5bp 0.3 10bp Provision Coverage Ratio (%) 75.3 77.7 (241)bp 82.7 (741)bp Slippage ratio (%) 1.5 1.4 11bp 1.3 22bp NPA provision to avg. assets (%) 0.5 0.4 11bp 0.5 6bp
Source: Company, Angel Research

Business momentum remains healthy

Business growth momentum for the bank remained on track in 3QFY2012 as well. Advances grew by healthy 6.2% qoq; on a yoy basis, the base effect sedated advances growth to 20.4%. On a sequential basis, healthy traction was witnessed in the retail and large and mid-corporate credit segment. Retail loans grew by strong 13.4% qoq (32.1% yoy), resulting in their share in total loan book rising to 22.4% from 20.9% in 2QFY2012. The sharp rise in retail loans was driven by housing loans (grew by robust 47.8% yoy) as well as auto loans (grew by strong 56.1% yoy). Growth in the large and mid-corporate segment, though moderated from the previous quarters, remained reasonably healthy at 5.9% qoq (19.2% yoy). The banks exposure to large and mid-corporate borrowers rated below-A had risen from 25% in 1QFY2012 to 27% in 2QFY2012 and has further risen to 30% as of 3QFY2012.

Exhibit 4: Strong sequential growth in corporate and retail advances

Particulars (` cr) Corporate SME Agri Retail - Housing - Auto - Others Total advances 3QFY12 84,083 20,692 10,700 33,264 24,948 4,324 3,992 148,739 2QFY12 79,390 20,755 10,616 29,328 22,289 3,813 3,226 140,089 % chg (qoq) 5.9 (0.3) 0.8 13.4 11.9 13.4 23.7 6.2 3QFY11 70,518 17,053 10,772 25,190 16,877 2,771 5,542 123,533 % chg (yoy) 19.2 21.3 (0.7) 32.1 47.8 56.1 (28.0) 20.4 % to total 56.5 13.9 7.2 22.4 16.8 2.9 2.7 100.0

Source: Company, Angel Research

January 20, 2012

Axis Bank | 3QFY2012 Result Update

Deposit accretion sustained the traction gained in 2QFY2012 into 3QFY2012 as well, with rise of 7.3% qoq and 33.9% yoy. The sequential rise in deposits was primarily on the back of period-end spurt in current account deposits, which constuituted 29% on the incremental deposits as compared to share of 18% as of 2QFY2012. Savings deposits growth was muted at 1.1% qoq, relatively better at 20.9% on a yoy basis. Faster growth in term deposits and muted saving deposits growth resulted in incremental CASA ratio slipping to 32.4% from 45.1% in 2QFY2012. On a daily average basis, saving account deposits grew by 19% yoy, while current account deposits increased by muted 4% yoy. Period-end CASA ratio remained largely steady around the 42% mark in spite of the recent deregualtion of interest rates on savings accounts and NRE deposits. The bank has been focussing on building a stronger retail term deposits portfolio, as evident from the 48% yoy growth in this deposit franchise. Retail term deposits now constitute 37% of total term deposits.

Exhibit 5: Average CASA growth moderates further

45 36 27 18 9 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 Reported yoy growth in average CASA balances (%) 36

Exhibit 6: Period-end CASA ratio remains stable

(%) 43.0 42.3 41.1 40.5 42.2 41.6

23

41.0 20 20 13 39.0

37.0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

Source: Company, Angel Research

Source: Company, Angel Research

NIM stable despite rise in cost of funds; moderation expected going ahead
The banks reported NIM for the quarter remained largely stable at 3.75% despite a 15bp qoq rise in cost of funds. However, going forward, management expects some moderation in margins and still maintains its NIM guidance of 3.25-3.75%.

Exhibit 7: 15bp rise in cost of funds absorbed well...

(%) 6.5 5.56 5.5 4.79 4.5 6.13 6.19 6.34

Exhibit 8: ...leading to stable NIM

(%) 3.9 3.6 3.3 3.0 2.7 3.81 3.78 3.44 3.28 3.75

3.5 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

Source: Company, Angel Research

Source: Company, Angel Research

January 20, 2012

Axis Bank | 3QFY2012 Result Update

Fee income growth remains healthy

The banks fee income continued its growth momentum, registering 26% yoy growth. Growth in fees was broad-based across most segments. Growth was especially strong in the corporate (up 34.4% yoy) and retail (up 26% yoy) segment, led by income from third-party products business (up 50.8% yoy) and income from cards, retail forex and remittance (up 38.8% yoy) business. Fee income from treasury registered healthy growth of 24.7% yoy. Growth in non-interest income excluding trading gains was relatively better at 29.5% yoy. The bank earned trading profits of `118cr in 3QFY2012 as compared to `28cr in 2QFY2012. Trading profits were primarily driven by `130cr earned from the relatively more volatile proprietary trading in the forex and derivatives segment.

Exhibit 9: Healthy fee income growth

Particulars (` cr) Fee Income Corporate Treasury Agri & SME Business banking Capital markets Retail - Third-Party Products - Cards, Retail Forex & Remittance - Other Retail Trading profit Others Other income Other income excl. Treasury
Source: Company, Angel Research

3QFY12 2QFY12 % chg (qoq) 3QFY11 % chg (yoy) 1,223 473 232 66 109 13 330 98 111 121 118 90 1,430 1,312 1,121 379 274 64 98 15 291 70 101 120 28 87 1,235 1,207 9.1 24.8 (15.3) 3.1 11.2 (13.3) 13.4 40.0 9.9 0.8 325.5 3.5 15.8 8.7 968 352 186 58 95 15 262 65 80 117 135 45 1,148 1,013 26.3 34.4 24.7 13.8 14.7 (13.3) 26.0 50.8 38.8 3.4 (12.7) 97.6 24.6 29.5

Asset-quality concerns overdone

The bank was able to largely keep asset-quality pressures in check. The annualized slippage ratio remained in-line with the range witnessed in FY2011 at ~1.5%, despite the sharp slowdown witnessed in the domestic macro environment over the past few quarters. The bank restructured loans worth ~`300cr, in-line with `312cr restructuring in 2QFY2012. Gross and net NPA ratios remained largely stable sequentially on the back of ~`240cr of write-offs and healthy sequential growth in advances. However, provision coverage ratio including technical write-offs continued to remain moderate, still at comfortable levels, to 75.3% (77.7% in 2QFY2012 and 82.7% in 3QFY2011). Absolute amount of gross and net NPAs rose sequentially by 9.8% and 24.4% qoq, respectively. NPA provisions rose from `247cr (0.4% of average assets) witnessed in 2QFY2012 to `334cr (0.5% of average assets). NPA provisions to average advances stood at 0.9% for 3QFY2012 (0.7% in 9MFY2012) and going forward management expects to contain it at 0.8% in the near term. The banks restructured loans aggregated to `295cr during 3QFY2012 as compared to `312cr restructured in 2QFY2012. Cumulative restructured assets increased to `2,701cr from `2,410cr in 2QFY2012. Out of the cumulative restructured book, large and mid-corporate credit group accounted for 75% and

January 20, 2012

Axis Bank | 3QFY2012 Result Update

the agricultural segment including MFIs contributed 11%, while the balance was restructured in SME and capital markets. A sector-wise analysis by the bank indicates that restructuring of the shipping as well as the petroleum sectors loans was the highest at 17% each, followed by the textiles and micro finance sectors at 16% and 8%, respectively.

Exhibit 10: Slippages rise in-line with expectations

(%) 1.60 1.20 0.80 0.40 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 1.28 0.95 0.83 1.39 1.50

Exhibit 11: Largely stable asset quality

Gross NPAs (%) 82.7 1.3 80.9 1.0 0.8 0.5 Net NPAs (%) 80.0 77.7 NPA coverage (%, RHS) 85.0 75.3 77.5 70.0 62.5

1.1 0.3

1.0 0.3

1.1 0.3

1.1 0.3

1.1 0.4
55.0 CIR (%, RHS) 47.0
42.3

0.3 -

3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

Source: Company, Angel Research; Note: PCR including tech. write-offs

Source: Company, Angel Research

Opex under control

Relatively faster rise in operating income as compared to operating expenses on a sequential basis led to a sharp ~300bp qoq improvement in the cost-to-income ratio to 42.3% from 45.2% witnessed in 2QFY2012. As a result of gaining traction in network expansion, overall opex of the bank rose by 23.6% yoy. During 3QFY2012, the bank added 47 branches (103 branches in 9MFY2012), taking its branch network to 1,493. The bank also added 730 ATMs during the quarter (over 2,000 ATMs added in 9MFY2012), taking its ATM network size to 8,324 ATMs. Management plans to add ~250 branches in FY2012, including the stipulated 25% branches in unbanked tier-5 and 6 centers in terms of the RBIs guidelines.

Exhibit 12: Network expansion continues steadily

Branches 1,600 6,871 1,200 5,303 6,270 ATMs (RHS) 7,594 8,324 10,000 7,500 5,000

Exhibit 13: Cost-to-income ratio rises above 45%

Opex to avg. assets (%) 2.5 2.4 2.3 2.2 2.1 2.0 2.4 2.4 2.2 2.4 2.3 38.0
42.4

46.1

45.2

44.0

42.2

1,120

1,390

1,411

1,446

1,493

800

2,500 -

41.0

400 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

Source: Company, Angel Research

Source: Company, Angel Research; Note: Branches till 3QFY11 incl. service branches

Capital adequacy comfortable for now

On account of a pick-up in business momentum during the quarter, the banks tier-I CAR (including profits) dipped by ~60bp yoy to 9.6% in 3QFY2012 from 10.2% in 3QFY2011. The bank is not looking at any immediate tier-I capitalraising plans, as it has significant headroom for raising tier-II capital.

January 20, 2012

Axis Bank | 3QFY2012 Result Update

Investment arguments
Branch expansion to support faster market share gains
We believe Axis Banks reasonable capital adequacy positions it for market share gains with at least 500bp higher growth than industry over FY201113. The bank has expanded its network at a 33.6% CAGR since FY200311, driving a four-fold increase in its CASA market share to 4.0% by FY2010 (a 20bp yoy increase in FY2010). In our view, such gains (3050bp every year) will continue going forward as well, especially as network expansion (250+ additions, about 2025% yoy) remains strong.

Fee income continues to drive higher RoEs

Fee income contribution across a spectrum of services has been a meaningful 1.9% of assets (almost twice the level in PSBs) over FY200911. Going forward, fee income growth is likely to at least mirror balance sheet growth. We have built in an 18.5% CAGR over FY201113), taking the contribution to 1.8-1.9% of assets for FY2012 and FY2013. In order to further bolster its fee income, the bank has also been focusing on growing new streams, which is evident from the strong traction witnessed in the retail fee income.

Book-accretive dilution on the cards in the next 1218 months

Axis Bank's tier-I capital adequacy (including 9HFY2012 profits) dipped to 9.6% as of 3QFY2012 from 11.2% in FY2010 due to strong credit growth. Going forward also, we expect management to meet its guidance for healthy growth of ~1.4x the industrys growth. This is likely to result in a need to raise capital in the next 1218 months, as per our calculations. (Axis Bank had last raised capital in 2QFY2010 when its tier-I CAR was 9.4%). Dilution is likely to be book-accretive and will aid in further enhancing the bank's credit market share going forward.

Outlook and valuation

Axis Banks aggressive branch expansion (at a CAGR of ~29%) over FY200811 is expected to lead to further CASA market share gains for the bank. In FY2011 alone, the bank added over 400 branches (an increase of 41.4% yoy). These branches are expected to contribute more meaningfully in FY2012 and FY2013 and aid in driving business and profitability growth for the bank. These 400 odd new branches have already contributed ~`3,300cr to the low-cost CASA deposits base as of 3QFY2012. The stock has been underperforming peers over the past few months on twin concerns of margins and asset quality. On the NIM front, in-line with our view mentioned in the previous results update, margins appear to have bottomed out at 1QFY2012 levels. However, current margins at 3.75% are likely to come off a bit in the coming quarters. On the asset-quality front, the bank has done better than street expectations, in our view, by containing the annualized slippage ratio at 1.5% for 3QFY2012 (in-line with 1.4% witnessed in FY2011) in spite of the sharp moderation in various domestic macro growth parameters and the impact of higher interest rates.

January 20, 2012

Axis Bank | 3QFY2012 Result Update

However, on a conservative basis, we have maintained elevated slippages forecast for FY2012 and FY2013 of 1.7% and 1.8%, respectively. Following the better-than-expected holding up of asset quality and the continuance of healthy traction in fee income, we have tweaked our estimates to factor in lower provisioning expenses and higher fee income. Overall, we have increased our earnings forecast by ~5% each for FY2012 and FY2013. Axis Bank is trading at 1.6x FY2013E ABV 52% discount to HDFC Bank (which would be even higher post capital raising) vs. an average discount of 32.5% since July 2006. While the banks ALM position vis--vis HDFC Bank is currently a disadvantage, however, with the interest rate cycle peaked out, in our view, the bank will also benefit more once interest rates start coming off. We remain positive on the bank, owing to its attractive CASA franchise, multiple sources of sustainable fee income, strong growth outlook and A-list management. We maintain our Buy recommendation on the stock with a target price of `1,299.

Exhibit 14: Key assumptions

Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Coverage ratio
Source: Angel Research

Earlier estimates FY2012 19.0 22.0 41.3 3.1 11.3 26.0 20.0 1.7 72.1 FY2013 22.0 22.0 41.5 3.1 19.2 25.0 25.0 1.9 71.8

Revised estimates FY2012 20.0 24.0 40.6 3.1 16.9 30.0 21.0 1.7 76.6 FY2013 22.0 22.0 40.9 3.1 14.6 25.0 25.0 1.8 76.2

Exhibit 15: Change in estimates

FY2012 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

FY2013 Earlier estimates 9,850 6,148 15,998 7,290 8,708 1,842 6,866 2,228 4,639 Revised Var. (%) estimates 9,979 6,205 16,184 7,410 8,774 1,528 7,246 2,351 4,895 1.3 0.9 1.2 1.6 0.8 (17.0) 5.5 5.5 5.5

Earlier estimates 8,058 5,157 13,215 5,832 7,383 1,512 5,871 1,905 3,966

Revised Var. (%) estimates 8,132 5,416 13,548 5,928 7,620 1,438 6,182 2,006 4,176 0.9 5.0 2.5 1.6 3.2 (4.9) 5.3 5.3 5.3

January 20, 2012

Axis Bank | 3QFY2012 Result Update

Exhibit 16: Angel EPS forecast vs. consensus

Year (`) FY2012E FY2013E Angel forecast 101.7 115.4 Bloomberg consensus 96.4 113.8 Var. (%) 5.5 1.4

Source: Bloomberg, Angel Research

Exhibit 17: P/ABV band

Price (`) 2,000 1,600 1,200 800 400 0 0.8x 1.4x 2x 2.6x 3.2x

Nov-06

May-10

Dec-10

Apr-06

Aug-08

Mar-09

Oct-09

Jul-11

Source: Company, Angel Research

Exhibit 18: Discount to HDFC Bank (%)

-

Feb-07

Feb-08

Feb-09

Feb-10

Aug-06

Aug-07

Aug-08

Aug-09

Aug-10

Feb-11

(15.0)

(30.0)

(%)

(45.0)

(60.0)
Source: Company, Angel Research

January 20, 2012

Aug-11

Feb-12

Jun-07

Jan-08

Axis Bank | 3QFY2012 Result Update

Exhibit 19: Recommendation summary

Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI BOM CanBk CentBk CorpBk DenaBk IDBI# IndBk IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk Reco. Buy Neutral Neutral Buy Neutral Accumulate Neutral Reduce Accumulate Neutral Accumulate Neutral Reduce Accumulate Neutral Neutral Neutral Neutral Neutral Neutral Accumulate Accumulate Accumulate Reduce Accumulate Accumulate Reduce CMP (`) 1,008 382 489 843 22 298 146 100 780 319 46 430 79 390 61 96 210 87 756 229 949 1,932 87 62 196 59 54 Tgt. price (`) 1,299 1,040 314 94 834 51 73 420 1,015 2,124 98 58 210 67 49 Upside (%) 28.9 23.4 5.4 (6.1) 6.9 11.8 (8.0) 7.7 7.0 9.9 13.0 (7.2) 7.0 13.1 (8.8) FY2013E P/ABV (x) 1.6 1.0 3.3 1.5 1.1 1.9 0.7 0.7 1.1 1.0 0.7 0.9 0.7 0.6 0.4 0.6 0.8 0.6 0.8 0.6 1.1 1.6 0.6 0.8 0.8 0.6 0.7 FY2013E Tgt P/ABV (x) 2.1 1.9 2.0 0.7 1.2 0.8 0.6 0.7 1.2 1.7 0.7 0.7 0.9 0.6 0.7 FY2013E P/E (x) 8.7 8.7 16.9 13.3 6.6 10.3 4.1 4.9 6.0 7.0 5.1 5.5 5.0 4.2 3.2 4.7 5.0 4.4 4.5 5.2 5.9 9.3 3.7 4.0 5.0 4.1 5.7 FY2011-13E EPS CAGR (%) 18.2 13.0 30.8 19.2 13.5 17.7 9.6 (4.8) 9.3 0.1 21.2 (7.0) (24.3) (1.8) 2.4 9.9 3.8 7.1 14.9 (7.4) 7.3 26.0 12.5 10.9 (0.3) 4.3 4.1 FY2013E RoA (%) 1.5 1.1 1.8 1.3 0.9 1.3 0.9 0.8 1.1 0.6 0.7 0.8 0.4 0.8 0.8 0.7 1.2 0.5 1.4 0.7 1.0 0.8 0.7 0.6 0.7 0.6 0.5 FY2013E RoE (%) 20.2 12.5 21.0 14.4 17.5 20.1 17.6 14.6 19.1 13.3 15.6 15.8 11.4 15.5 14.9 13.4 18.4 13.0 18.6 11.1 19.7 17.9 16.3 15.4 15.4 12.1 11.6

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

January 20, 2012

10

Axis Bank | 3QFY2012 Result Update

Income statement
Y/E March (` cr) Net Interest Income - YoY Growth (%) Other Income - YoY Growth (%) Operating Income - YoY Growth (%) Operating Expenses - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov. & Cont. - YoY Growth (%) Profit Before Tax - YoY Growth (%) Prov. for Taxation - as a % of PBT PAT - YoY Growth (%) FY07 1,567 45.3 1,010 38.4 2,577 42.6 1,215 49.2 1,363 37.1 366 39.6 996 36.2 337 33.8 659 35.9 FY08 2,585 65.0 1,795 77.7 4,381 70.0 2,155 77.4 2,226 63.4 579 58.2 1,646 65.3 575 35.0 1,071 62.5 FY09 3,686 42.6 2,834 57.8 6,520 48.8 2,858 32.6 3,662 64.5 877 51.3 2,785 69.2 970 34.8 1,815 69.5 FY10 5,004 35.8 3,946 39.2 8,950 37.3 3,710 29.8 5,241 43.1 1,389 58.5 3,851 38.3 1,337 34.7 2,515 38.5 FY11 6,563 31.1 4,632 17.4 11,195 25.1 4,779 28.8 6,416 22.4 1,280 (7.9) 5,136 33.3 1,747 34.0 3,388 34.8 FY12E 8,132 23.9 5,416 16.9 13,548 21.0 5,928 24.0 7,620 18.8 1,438 12.3 6,182 20.4 2,006 32.4 4,176 23.2 FY13E 9,979 22.7 6,205 14.6 16,184 19.5 7,410 25.0 8,774 15.1 1,528 6.3 7,246 17.2 2,351 32.4 4,895 17.2

Balance sheet
Y/E March (` cr) Share Capital Reserve & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab. & Prov. Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY07 282 3,112 58,786 46.5 5,196 3,501 2,381 4,661 2,257 26,897 36,876 65.3 673 1,892 47.3 FY08 358 8,411 49.1 5,624 3,429 4,130 7,306 5,199 33,705 59,661 61.8 923 2,785 49.6 FY09 359 9,855 33.9 10,185 5,334 4,613 9,419 5,598 46,330 36.7 1,073 3,744 34.8 FY10 405 15,639 20.4 10,014 7,156 6,134 9,482 5,722 55,975 27.9 1,222 3,906 22.3 FY11 411 18,588 33.9 19,275 6,993 8,209 13,886 7,522 71,992 36.5 2,273 4,632 34.4 FY12E 411 21,786 24.0 23,673 8,392 9,181 15,253 5,217 FY13E 424 25,833 22.0 28,789 10,238 10,963 18,608 6,344

87,626 117,374 141,300 189,238 234,655 286,279

73,257 109,578 147,721 180,648 242,713 298,097 362,527

97,795 118,323 20.0 2,981 5,962 22.8 22.0 3,517 7,251 21.6

81,557 104,341 142,408 170,889 208,485

73,257 109,578 147,721 180,648 242,713 298,097 362,527

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Axis Bank | 3QFY2012 Result Update

Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov. /Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS (75% cover.) DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage RoE 2.5 0.6 2.0 0.1 2.1 1.5 3.6 2.0 1.6 0.5 1.1 19.6 21.0 2.8 0.6 2.2 0.2 2.4 1.7 4.2 2.4 1.8 0.6 1.2 15.0 17.6 2.9 0.7 2.2 0.2 2.4 2.0 4.4 2.2 2.2 0.8 1.4 13.6 19.1 3.0 0.8 2.2 0.4 2.7 2.0 4.6 2.3 2.3 0.8 1.5 12.5 19.2 3.1 0.6 2.5 0.2 2.7 2.0 4.7 2.3 2.4 0.8 1.6 12.1 19.3 3.0 0.5 2.5 0.1 2.6 1.9 4.5 2.2 2.3 0.7 1.5 13.1 20.3 3.0 0.5 2.6 0.1 2.6 1.8 4.4 2.2 2.2 0.7 1.5 13.6 20.2 43.1 8.8 0.4 33.7 4.2 0.6 19.9 3.6 1.0 16.2 2.6 1.2 12.2 2.2 1.4 9.9 1.9 2.0 8.7 1.6 2.3 23.4 114.7 4.5 29.9 241.6 6.0 50.6 281.6 10.0 62.1 393.8 12.0 82.5 462.5 14.0 101.7 540.7 20.5 115.4 618.8 23.0 1.1 0.7 0.8 0.1 36.4 0.8 0.4 1.0 0.4 49.8 1.1 0.4 1.5 0.6 63.6 1.3 0.4 2.2 0.8 68.2 1.1 0.3 1.4 0.5 74.3 1.4 0.3 1.7 0.4 76.6 1.2 0.3 1.8 0.4 76.2 39.9 62.7 11.6 6.4 45.7 68.1 13.7 10.2 43.1 69.5 13.7 9.3 46.7 73.8 15.8 11.2 41.1 75.3 12.7 9.4 40.6 72.8 12.3 9.0 40.9 72.8 12.1 8.8 2.7 47.1 1.1 21.0 2.9 49.2 1.2 17.6 3.0 43.8 1.4 19.1 3.1 41.4 1.5 19.2 3.2 42.7 1.6 19.3 3.1 43.8 1.5 20.3 3.1 45.8 1.5 20.2 FY07 FY08 FY09 FY10 FY11 FY12E FY13E

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Axis Bank | 3QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Axis Bank No No Yes No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

January 20, 2012

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