Angel Broking is bullish on Axis Bank and has recommended buy rating on the stock with a target of Rs 501 in its October 20, 2014 research report.
"Axis Bank reported a good set of numbers for 2QFY2015 with an earnings growth of 18.2% yoy at Rs1610.7cr, mainly on account of healthy growth in net interest income."
"During 2QFY2015, the bank reported an advance growth of 20.3% yoy, while deposits grew by 11.1% yoy. The growth in the loan book has outpaced the industry loan growth, primarily due to strong traction witnessed in the Retail loan book, which grew by 27% yoy, and accounted for 38% of the advances as compared to 35% in 2QFY2014. The SME book grew at a steady pace of 15% yoy. Within retail, (88% of the domestic retail lending book is secured) 53% of advances were accounted by Home loans, 15% by Retail agricultural loans, 9% by Auto loans, and 9% by Personal Loans and Credit Cards. Focus on retail franchise continued to benefit the bank with CASA deposits registering a growth of 15.4% yoy, within which savings deposits grew by 20.1% yoy and current deposits growing by 8.2% yoy. The CASA ratio improved by 167bp yoy to 44.5%, which improved the NIM by 18bp yoy to 3.97%.Domestic and International NIM improved by 10bp qoq each to 4.3% and 1.7% respectively in 2QFY2015. Going forward, the Management has indicated at the NIM moderating slightly due to a 10bp cut in the base rate with 85-90% of loans being linked to the base rate. During the quarter, the bank witnessed slippages of Rs911cr (annualized slippage rate of 1.5%) as against Rs626cr in 1QFY2015 (annualized slippage rate of 1.09%). Overall, slippages and fresh restructuring taken together amounted to Rs1,481cr which is lower as compared to Rs1,649cr reported during 2QFY2014. The bank has maintained its guidance of Rs6,500cr of addition to stressed assets in FY2015."
"Healthy pace of branch expansion, leading to a robust distribution network, continues to be the driving force for the bank's retail business. Going forward, the bank will continue to focus on retail loans and will change its retail loans mix to a higher return business. With improvement in the economic environment, it is well positioned to grow by at least a few percentage points higher than the average industry growth rate. The Management has given a guidance of stressed assets at Rs6,500cr for FY2015 and with the stressed assets coming at Rs2,587cr in 1HFY2015, we believe that slippages and incremental restructuring for FY2015 will be lower than what has been guided by the bank. We maintain our Buy rating on the stock with a target price of Rs501," says Angel Broking research report.
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