AXIS BANK LIMITED IPO

COMPANY PROFILE

Axis Bank, formerly UTI Bank was first of the new private banks in India to start operations after the Government of India allowed new banks to be established in the private sec- tor. The Bank has been promoted by the largest financial institutions of the country, UTI, LIC, GIC and its subsidiaries. As at March 31, 2014, the Bank had a distribution network encompassing 2,402 domestic branches and extension counters and 12,922 ATMs situated in 1,636 cities and towns, compared to 1,947 domestic branches and extension counters, and 11,245 ATMs situated in 1,363 cities and towns last year. The Bank also has overseas offices in Singa- pore, Hong Kong, Shanghai, Colombo, Dubai and Abu Dhabi. For FY 2014, the Axis Bank’s net interest margins stood at 3.81% (3.70 % for FY 2013). For the same period, net NPA’s stood at 0.40 % (0.32 % for FY 2013).

40.34% of the Bank’ operating revenue came from non- funded segments such as fees and commissions for services. 39 % of total deposits with the Bank were in the form of low cost CASA (current account and savings accounts) deposits on which the Bank pays a lower rate of interest which helps the Bank in maintaining a high rate of net interest margins.

STOCK INFORMATION

STOCK PRICE

618.10

TARGET PRICE

650

SECTOR

BANKS

SYMBOL (AT NSE)

AXIS BANK

ISIN

INE238A01034

FACE VALUE (IN RS.)

2.00

BSE CODE

532215

STOCK FUNDAMENTALS

MARKET CAP

140753.95

BOOK VALUE

162.24

EPS - (TTM) (IN RS. CR.)

0.00

P/E

0.00

INDUSTRY P/E

23.35

INVESTMENT RATIONALE

Axis bank reported strong core performance on back of strong NIM (3.93%) and healthy loan growth (23.2% YoY). Although operating profit came strong at 26.8% YoY on back of healthy revenue growth along with containment of opex (C/I ratio fell by 110bps QoQ), PAT (18.4% YoY) grew at mod- erate pace (in-line with our expectations) due to higher pro- visions (2.5x YoY). Reported NIM came at 3.93% in Q3FY15, much ahead of management's medium term guidance of ~3.50%, largely aided by improvement in LDR (410bps QoQ)

SHAREHOLDING PATTERN

OUTLOOK AND VALUATION

Although headline NPLs have been holding well contrary to street expectations, high exposure to non-operational power portfolio remains a potential risk, in our view. Fresh impair- ment (Rs.8.4 bn) remained way below the management's guidance (Rs.65 bn for FY15). However, management has maintained its earlier guidance by factoring in higher re- structuring during Q4FY15 (Rs.20-21 bn in Q4FY15), as provi- sioning arbitrage ends between NPA and restructuring post FY15. At CMP, stock trades reasonable at 2.3x its FY17E ABV with healthy return ratios (RoE: 18- 19%, RoA: 1.8%). We are retaining BUY rating on the stock with revised TP of Rs.630-650.

RESULTS (Quarterly )(Rs CR.)

 

DEC' 14

SEP' 14

JUN' 14

MAR 14

DEC' 13

Sales

2,700.16

2,627.57

2,509.13

2,443.31

2,342.70

Operat- ing profit

2,607.59

2,552.26

2,432.52

2,363.08

2,278.70

Interest

2,119.23

2,064.27

1,976.36

1,874.29

1,854.30

Gross profit

523.99

519.11

490.61

523.43

458.07

EPS (Rs)

6.82

6.76

6.39

7.33

6.47

TECHNICAL VIEW

AXIS BANK LTD is looking strong on charts. We advise to buy around 610-620with stoploss of 590 for the targets of 650 lev- els. RSI is also showing upside momentum in it on daily charts.

SYMBOL

VALUE

ACTION

RSI(14)

84.406

OVERBOUGHT

STOCH(9,6)

56.452

BUY

STOCHRSI(14)

100.000

OVERBOUGHT

MACD(12,26)

8.760

BUY

ADX(14)

69.480

BUY

WILLIAMS %R

-12.322

OVERBOUGHT

CCI(14)

189.9302

BUY

ATR(14)

8.1714

HIGH VOLATILITY

HIGH/LOWS(14)

25.1786

BUY

ULTIMATE OSCILLATOR

25.1786

BUY

ROC

8.256

BUY

BULL/BEAR POWER()13

39.3500

BUY

BUY: 8 SELL:0 NEUTRAL: 3

SUMMARY : STRONG BUY

Our Other Recommendation for Next Week

SCRIP

ACTION

CMP

ENTRY

SL

TGT

TIME FRAME

  YES BANK

BUY

872.55

860-870

845

885-900

ONE WEEK

  AUROPHARMA

BUY

1089.5

1070-1085

1040

1120-1140

ONE WEEK

  CENTURY TEXTILE

BUY

538.75

525-535

519

545-570

ONE WEEK

  TATA MOTOR

BUY

602.85

595-605

585

615-625

ONE WEEK

 ICICI BANK

BUY

349.1

340-350

320

370-390

ONE WEEK

Performance of Previous

SCRIP

LOT

ACTION

ENTRY

SL

TGT

P&L

REMARK

CLOSE/LOW/HIGH

BHEL

1000

BUY

265-275

248

285-295

15000.00

NEAR TGT

262.15 / 281.75

      APOLLO HOSP

250

BUY

1320-1345

1295

1375-1420

-3750.00

SL TRG

1329.50 / 1293.00

DIVIS LAB

125

BUY

1680-1700

1650

1740-1790

8750.00

FIRST TGT HIT

1739.90 / 1757.05

HCL TECH

125

SELL

2000-2025

2060

1960-1920

7500.00

FIRST TGT HIT

2041.95 / 1957.55

CROMPTON

GREAVES

1000

BUY

175-180

170

185-190

-5000.00

SL TRG

177.70 / 169.95

APOLLO TYRE

2000

SELL

185-188

192

182-178

12000.00

BOTH TGT HIT

175.00/ 170.45

NET PROFIT

 

 

 

 

 

34500.00

 

 

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DISCLAIMER

This report is only for the information of our customers. Recommendations, opinions, or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.

 

 

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