Tuesday, April 21, 2009

[Investors Please Listen] Axis Bank Q4FY09 Result Update; Worthy earnings but asset concerns persist ; BUY ; Target : Rs650

Axis Bank

Worthy earnings but asset concerns persist


BUY

 

CMP: Rs510                              Target Price: Rs650


Axis Bank reported Rs5.8bn of net profit for Q4FY09, significantly ahead of our and market expectations primarily driven by higher NII, other income and lower than expected opex and provisions. The NII has grown by 24.6% yoy to Rs10.3bn driven by 34.8% yoy growth in the total assets and 10bps sequential expansion in NIMs. With just 11% rise in Opex, the operating profit has grown by 57.5% yoy to Rs11.4bn.

The highlight of the quarter were (1) stable NIMs despite rate cuts, (2) return of stability in the liability profile. The CASA deposit witnessed 517bps expansion sequentially to 43.1% (down just 253bps yoy).

Though the slippages were contained at 0.8% (annualized) for the quarter, the same could be because of restructuring of assets which could have become NPAs during the quarter. Hence we have raised our slippage assumption for FY10. The provision cover improved to 63.6% from 56.6% in the preceding quarter.

At the current valuations, the stock is quoting at 9.8x FY10E EPS and 1.7x FY10E ABV. We maintain our BUY recommendation on the stock with a price target of Rs650. The issues of the top management remain short term concern on the stock.


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Safe Harbor:

The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
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