Hold Axis bank; target of Rs 789: Arihant Capital

Arihant Capital 's research report on Axis bank

Axis Bank reported strong operating performance in Q3FY19. PAT surged by 131% at Rs. 1681cr driven by higher other income, which includes fee, treasury and miscellaneous income. Operating Profit for the quarter grew by 43% YOY to Rs 5,525 cr. Advances for the quarter grew by 13% YoY at Rs. 4,751 bln leading to higher NII growth of 18% to Rs. 5604 cr resulting into 9 bps improvement in NIM at 3.47%. Other income for the quarter grew by 54% YoY at Rs. 4001 cr. Treasury income for the quarter grew sharply by 90%. OPEX for the quarter grew by 18% YoY at Rs. 4080 cr taking CI ratio to 42.5% from 47.4% YoY.

Outlook

We have valued the stock at the P/ABV of 3.0x to its FY20E and arrived at a fair value of Rs 789 per share giving an upside of 9.0%. At CMP of Rs 723 the stock is available at its FY 20E P/ABV of 2.8(x). We have an 'HOLD' rating on the stock.

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Read More First Published on Feb 28, 2019 05:08 pm