"Axis Bank reported steady operating performance with net earnings of Rs1124 crore growing 22.1% y-o-y & down 2.6% q-o-q, in line with our expectation. NII grew steadily 15.9% y-o-y and 6.7% q-o-q aided by loan book growth 23% y/y and 9bps q-o-q NIM improvement. Core fee income growth was strong at 19.9% y-o-y & 16.4% q-o-q supported by retail fee (43% y/y), business banking (26% y/y) and corporate fee (17% (y/y). Trading gains increased 38% q-o-q to Rs207crore due to higher equity gains (included AMC stake sale). Provisions increased 96.8% q-o-q due to higher loan loss provision and contingent provision (Rs 150 crore). CASA deposits growth moderated 16.3% y-o-y and 49.9% q-o-q mainly due to healthy traction in saving deposits and uptick in current account deposits."
"NII grew 15.9% y-o-y & 6.7 q-o-q driven by healthy loan book growth 23%y/y and 9bps sequential NIM improvement. Reported NIMs marginally increased from 3.37% in Q1FY13 to 3.46% in Q2FY13 due to healthy CASA ratio and decline in wholesale deposits. We believe net interest margins are likely to improve on the back of lower deposit costs and increasing retail loan book mix in coming quarters. Non- interest income grew 29.0% y-o-y & 19.3% q-o-q to Rs 1,593 crore primarily attributable to steady fee income growth (19.9% y-o-y at Rs 1343cr). Retail banking (up 43% y-o-y) & business banking (26% y-o-y) segments were the key drivers for fee income growth."
"Axis Bank has reported steady operating performance largely attributable to healthy fee income growth, higher trading gains and steady NII growth. We believe Axis Bank will benefit from decline in wholesale deposit rate and increasing retail loan book mix in coming quarters. Receding concerns in infrastructure and power sector, decline in interest rates and better investment environment will abate perceived asset quality risk and re-rate the stock in medium term. We expect the bank to deliver 16.8% CAGR in net earnings over FY12-FY14. At Rs1,150, the stock is trading at 8.2x FY14 earnings and 1.6x FY14ABV, offering favorable risk reward for investors given the better medium term RoEs. We reiterate our buy rating on the stock with revised target price of Rs1409," says KRChoksey research report.
Institutional holding more than 40% in Indian cos
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