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.