New year stock - Axis Bank

Buy - AXISBANK

CMP (NSE) 15:58, 20 May

673.10 22.93.52%

Download

PDF

Sector

Banking

Add to

WatchList

Add to

Portfolio

Reco. Price

670

Period

12-Months

Target Price

970

upside

%

Stop Loss

0

Last updated on

31 Dec, 2021

Axis Bank is the third-largest private bank in India with a ~5.7% market share in loans as of FY21. The bank has a wide distribution reach, comprising 4,954 branches and 11,333 ATMs as of March 2021. It has built an impressive deposit franchise over the past ten years, with a ~45% CASA ratio. Its well-diversified loan book of Rs6.2tn, as of March 2021, is spread across retail, SME, and mid and large corporates. It retains a strong market position in corporate lending due to its capability to intermediate through banking channels and debt capital market services.

Investment Rationale
Increase in loan disbursements
: Corporate loan Disbursements were up 24% QoQ, flat YoY. Mid-corporate segment grew 32% YoY / 10% QoQ. The QoQ decline in corporate loans was attributed to deleveraging by corporates, certain prepayments and corporates accessing sources of funds other than bank loans. Capex cycle has bottomed out and a pick-up could be postponed by 6-12 months. Festive demand had been strong, so working capital utilisation (which has so far been weal) should improve going forward. Retail disbursements grew 54% YoY and 54% QoQ. Home loan disbursements were up 86% YoY and 54% QoQ. SBB disbursements were up 103% YoY / 72% QoQ. AXSB has become more comfortable in growing its unsecured retail book off-late. Disbursements in the Personal loan segment were up 72% YoY and 21% QoQ. Credit card spends were up 54% YoY and 34% QoQ, and are trending above pre-COVID levels. The bank intends to grow unsecured retail loans faster over the next few years.

Index vs Stock Relative Chart

Please refer to Research Disclaimer for additional recommendation parameter, analyst disclaimer and other disclosures.